Technology services giant Electronic Data Systems has signed a deal to crawl under Hewlett-Packard's even larger umbrella. Say hello to the new HP, cast in the image of the old IBM.

The deal was approved by both boards of directors, and is now awaiting the thumbs-up from American and foreign regulators, as well as from EDS' shareholders. The price tag is $13.9 billion, or $25 per EDS share in an all-cash transaction. That includes shouldering about $300 million of EDS net debt, a trivial amount in these lofty price ranges.

HP needs to take on some new debt to finance the deal, as the coffers currently have only $9.9 billion sloshing around. The company will probably also cut back on its share buybacks, where it usually spends about $2 billion per quarter. The final John Hancocks should come in the second half of 2008, giving HP some time to collect the funds.

EDS will form the basis of a new division within HP, branded "EDS—an HP company," headquartered in Plano, Tex., and led by EDS CEO Ronald Rittenmeyer. In other words, it will be business as usual for EDS once the customary job cuts in synergistic areas are done. The new addition more than triples the size of HP's service department, with sales expected to top $55 billion next year. The acquisition will also add to the buyer's profits as early as next year, which means that management expects a pretty smooth integration ride.

I was surprised to see this announcement, since HP is doing very well in the hardware sector under post-Carly CEO Mark Hurd. If these guys were going to buy anything, I would have expected it to be something in the hardware sector, not support services. But it is certainly true that support services tend to carry higher profit margins than servers and printers do, so if HP wants to expand into a new market, it might as well be this one. The two companies have a very long history of cooperation, and the working relationship between Dell and EDS gives HP the satisfaction of nixing that deal or pulling the pricing strings any way it wants.