EDS today announced it will acquire Loudcloud’s managed hosting business and license Opsware(TM), Loudcloud’s cutting-edge IT automation software. The Opsware agreement enables EDS to automate the management of complex computing environments within one of the world’s largest IT infrastructures.
The purchase price for the acquired business is $63.5 million. Loudcloud earlier announced that it anticipated its 2002 (FY 2003) revenue stream from this business to be approximately $75 million. The agreement brings to EDS Loudcloud’s web hosting business and a marquee list of 50 enterprise web hosting clients.
Under terms of the licensing agreement, EDS will pay $52 million over three years. The agreement provides the foundation for widespread automation of service delivery and applications management — first within EDS’ managed Web hosting business, and over time, throughout EDS’ global network of over 50,000 servers in 14 major data centers and 140 client-owned and regional data centers worldwide.
In a separate release today, Loudcloud also announced that it will change its name and brand identity to Opsware Inc.
“These agreements further strengthen EDS’ leadership position in Web hosting, a market growing at a 61 percent compound annual rate,” said Doug Frederick, executive vice president and sector executive for EDS Operations Solutions. “This already is a significant business for EDS, and we have the infrastructure in place to support it. We can better leverage Loudcloud’s hosting business and personnel across our enterprise. We will gain additional strategic value by deploying the Opsware automated solution throughout our powerful global data center network, an initiative we expect to generate well over $100 million in savings over the term of the agreement.”
By fully leveraging Opsware, EDS expects to build on its existing capability and data center capacity to deliver computing services on-demand while continuing to provide the highest levels of data integrity and security. This utility computing model is often compared to how consumers buy and use electricity today. Opsware provides a powerful software system to the evolution of this utility computing model by making computing resources and services like large-scale provisioning and scaling available on demand.
For EDS, the deployment of Opsware is expected to dramatically reduce cost and improve efficiencies in the data center environment by automating the complete lifecycle of managing business applications and the underlying infrastructure.
“Combining the best thinking Silicon Valley has to offer, with 40 years of intellectual capital, security and infrastructure at EDS brings a unique value proposition to the IT market,” said Loudcloud Chairman Marc Andreessen. “Add to this mix the advantage that our Opsware technology brings by automating the management of highly complex, heterogeneous computing environments, and you have a value proposition that exists no place else.”
The acquisition of Loudcloud’s managed hosting business is expected to close in September, and is expected to be neutral to EDS’ earnings in 2002 and accretive in 2003. Upon closing, about 140 Loudcloud employees in Northern California, Virginia, New York, and the United Kingdom will transition to EDS.