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EDS to Acquire Loudcloud Hosting Business

Electronic Data Systems said Monday it plans to acquire Loudcloud's Internet-hosting business for $63.5 million and to license software from the company, which is changing its name to Opsware.

Sunnyvale, Calif.-based Loudcloud, which has Netscape co-founder Marc Andreessen as its chairman, went public last March but never gained much footing as an independent company. Underwriters twice cut the size of Loudcloud's $150 million offering to push it through, finally pricing it at $6 a share.

In early afternoon trading Monday, its shares were up 37 cents, or 22.7 percent, to $2 on the Nasdaq.

Opsware, which will sell information-technology automation software, will continue to have Ben Horowitz as CEO and Andreessen as chairman. Under the licensing agreement, EDS will pay $52 million over three years.

"These agreements further strengthen EDS's leadership position in Web hosting," says Doug Frederick, executive vice president and sector executive for EDS Operations Solutions.

The acquisition is expected to close in September. Plano, Texas-based EDS expects it to be neutral to earnings in 2002 and add to earnings in 2003. Upon closing, about 140 Loudcloud employees will move to EDS. Loudcloud had annual revenue of $56 million last year.

Copyright © 2002 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.

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