Electronic Data Systems shareholder files suit to stop merger with Hewlett-Packard

By Lisa Kerner

Charlotte, N.C., May 29 - The Intermountain Ironworkers Trust Fund (IITF) filed suit in Collin County, Texas, to stop the sale of Electronic Data Systems Corp. to Hewlett-Packard Corp.

The suit alleges that the terms of the sale agreement are unfair to Electronic Data Systems shareholders and that the company's directors breached their fiduciary duties, according to a statement released by Baron & Budd, PC, the Dallas-based law firm representing IITF.

Electronic Data System shareholders have not yet approved the $25-per-share sale agreement.

Baron & Budd noted that the agreement does not allow Electronic Data Systems to seek higher alternative bids.

The agreement also guarantees Hewlett-Packard a $375 million payoff if Electronic Data Systems does not go through with the sale, the release said.

"This deal leaves Electronic Data Systems shareholders out in the cold," Russell Budd, managing shareholder of Baron & Budd, said in the release. "They had no say in the transaction, and the company directors who are charged with protecting their interests looked the other way."

Baron & Budd said it successfully increased the tender offer's price per share in the 2005 transaction that took 7-Eleven, Inc. private.

As already reported, Hewlett-Packard entered into a definitive agreement to purchase Electronic Data Systems for $25 per share, or approximately $13.9 billion.

The merger agreement includes a termination fee of $375 million payable by Electronic Data Systems to Hewlett-Packard under specified circumstances, it was reported in a form 8-K filing with the Securities and Exchange Commission.

Hewlett-Packard said it will establish a new business group, to be branded Electronic Data Systems - an HP company, based in Plano, Texas, and led by Electronic Data Systems chairman, president and chief executive officer Ronald A. Rittenmeyer.

Electronic Data Systems is a technology services company based in Plano, Texas.

Hewlett-Packard is a Palo Alto, Calif., computer, printing and imaging technology company.

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