21 June 2005 IT services provider Electronic Data Systems (EDS) is to sell its management consulting firm AT Kearney to a third-party, after plans for a management buyout fell through.
EDS executives said in May 2005 that the consulting firm could be unbundled to Kearney’s partners by the end of this year, but will now look to sell the unit to a third party, claiming this is in the best interests of both EDS and AT Kearney.
The decision to sell the unit is part of EDS chairman Michael Jordan’s plans to refocus the group on its core businesses and to recover from several high-profile project failures. Jordan classified A.T. Kearney as “noncore” after taking over the ailing group from ousted chief executive officer Dick Brown in 2003.
According to the Wall Street Journal a likely purchaser is consulting firm Monitor Group, a company half the size of Kearney.
EDS acquired A.T. Kearney in 1995, but struggled to integrate the unit into its core outsourcing culture. The resulting culture clash has produced disappointing performances for both groups – in 2004 AT Kearney posted a $10 million loss and contributed only 5% to EDS’s total revenues.
The sale is unlikely to affect any EDS customers, says Julie Giera, vice president at Forrester Research. But, EDS and Kearney are likely to maintain an ongoing relationship because EDS cannot afford to scrap the progress it has made in indirect procurement business process outsourcing, she says.
The sale will allow A.T. Kearney to rebuild its business away from the watchful eye of public traded company EDS and its analysts.