EDS buys the Feld Group in $89M deal

Electronic Data Systems  (EDS) has acquired IT management consultancy the Feld Group, a purchase intended to strengthen EDS’ executive ranks and IT-transformation and business process outsourcing services.

EDS bought the Dallas-based, privately-held Feld Group for about $41 million in cash and $48 million in restricted stock, warrants and options, EDS announced Monday.

With the Feld Group, EDS gains skills, staff and software for reorganizing companies’ IT departments, as well as two senior executives who are stepping into a pair of new and key positions at EDS.

The Feld Group, founded in 1992, has among its success stories the transformation of the IT departments at Burlington Northern Santa Fe and PricewaterhouseCoopers, said EDS of Plano, Texas. Most of its staff of about 60 people is transferring over to EDS, an EDS spokesman said Monday.

Charlie Feld, founder, chief executive and president of the Feld Group, and Steve Schuckenbrock, chief operating officer of the Feld Group’s consulting business, will lead two of EDS’ three new operating groups, reporting directly to EDS Chairman and Chief Executive Officer (CEO) Michael Jordan, the spokesman said.

Feld will become executive vice president of EDS’ Portfolio Management group, while Schuckenbrock steps in as executive vice president of the Global Sales & Client Solutions group. Former ChevronTexaco chief information officer (CIO) Dave Clementz had previously been appointed to lead the other major operating group, Service Delivery. Schuckenbrock and Feld are also former CIOs.

As head of the Portfolio Management group, Feld will oversee the creation, updating and packaging of EDS service offerings, which Schukenbrock’s group, Global Sales & Client Solutions, will be entrusted with selling, the spokesman said.

These three operating groups replaced multiple lines of businesses. The new operating structure, announced by CEO Jordan in mid-2003 along with other restructuring measures, is meant to simplify the way EDS interacts with customers, improve how it delivers services and sharpen the focus of its services portfolio on EDS’ core outsourcing strength.

Jordan took over as chairman and CEO in March 2003, after EDS ran into problems, including disappointing sales, an ongoing U.S. Securities and Exchange Commission investigation, large money-losing contracts and layoffs. The Feld Group acquisition “speeds our transition,” Jordan said in a statement Monday.

The Wall Street Journal reported in November that Jordan wanted EDS to buy the Feld Group, but that EDS directors at the time hadn’t given the go-ahead because they were concerned about the appearance of conflict of interest. Jordan and Feld are long-time friends and the two have been involved in several business relationships together, The Journal reported in a Nov. 7, 2003 article, based on interviews with unnamed sources familiar with the EDS board’s conflict of interest concerns.