Hewlett-Packard Co. said Tuesday that it has agreed to buy Electronic Data Systems Corp. for $13.9 billion, or $25 per share in cash.

The boards of both companies have approved the terms of the deal, which is expected to close in the second half of 2008.

H-P said it intends to establish a new business group branded as "EDS – an HP company," which will be headquartered at the current EDS offices in Plano.

EDS chairman, chief executive officer and president Ron Rittenmeyer will continue to lead the new EDS division after the purchase is complete.

“This is very positive for the employees and the clients and the shareholders,” Mr. Rittenmeyer said in an interview. “We would not have gone down this path if we didn’t think this didn’t have real value for everybody and for the community.”

Mr. Rittenmeyer declined to divulge which company initiated the deal and how long it took to hammer out the details, but said EDS’s board had several discussions about the buyout.

“We analyzed it, we looked at it, we debated it for several meetings,” he said. “It was not a one-meeting decision.”

Mr. Rittenmeyer said he agreed to stay on after Mark Hurd, H-P’s CEO, asked him to do so.

“I have a responsibility to this organization to see it through,” Mr. Rittenmeyer said.

“I really like what I do,” he added. “Second, I like Mark Hurd personally. I think he’s a real professional, and I think our skills are complementary in a lot of ways.”

But Mr. Rittenmeyer, 60, said he probably will retire at some point in the next few years.

H-P said the deal will more than double its revenue from business and computer services, which totaled $16.6 billion in 2007.

During a conference call with reporters Tuesday morning, Mr. Rittenmeyer said there will probably be some job cuts as a result of the deal.

But he suggested they might not be extensive, noting that H-P and EDS don't currently overlap in many business areas.

“In terms of job cuts, we are continuing to streamline our workforce at EDS,” Mr. Rittenmeyer said during the call. "We've been doing that for some time. There obviously are going to be some changes. We had plans for that this year.”

“We're going to continue to look at automation. We're going to continue to look at quality. Automation makes quality and service better for the client. It's just a natural evolution.”

Mr. Rittenmeyer said during the follow-up interview that those decisions have yet to be made, though.

And he declined to talk about which members of EDS’s senior management team will make the transition to HP.

Mr. Rittenmeyer said he sent a letter out to EDS employees on Tuesday, and plans to hold employee meetings starting Wednesday to answer questions about the merger.

He said one of his goals now is to keep EDS running as a standalone company while the buyout winds its way through regulatory approvals and a shareholder vote.

“The last thing we want to do is lose the value of this corporation or weaken the jobs for the people who are here,” Mr. Rittenmeyer said.

He said employees nervous about their jobs should have a similar focus.

“Great people will keep jobs,” he said. “Great people never have to worry. If people slack off, we will deal with that the same as if there were no offer.”

Some things won’t change even after the purchase goes through.

In addition to maintaining the Plano headquarters and EDS brand, Mr. Rittenmeyer said, EDS will continue to be the main sponsor of the annual Byron Nelson Championship golf tournament in Las Colinas.

“We’re still going to be a major player in this community,” Mr. Rittenmeyer said.

1962: Ross Perot starts Electronic Data Systems.

1979: Mort Meyerson is named president. EDS organizes a mission to rescue employees captured in Iran.

1984: General Motors buys EDS for $2.5 billion.

1986: Ross Perot, Mort Meyerson, senior vice president Bill Gayden and chief financial officer Tom Walter leave EDS with a $742 million buyout.

1996: GM spins off EDS.

SOURCES: EDS; Dallas Morning News research