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  Electronic Data Systems is planning to sell its management consulting arm A.T.Kearney instead of pursuing a management buyout as it previously had planned.
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EDS is in talks to sell Kearney to Monitor Group Inc., a consulting and investment firm, according to the Wall Street Journal, citing people familiar with the situation.

EDS had been in talks with partners of the firm interested in a management buy-out, but the company said last week it was no longer pursuing this as an option.

Instead EDS has been in talks with a third party and a company spokes person has been reported as saying that the sale should be completed by the end of the third quarter. EDS has refused to identify the potential buyer. The EDS spokesman declined to put a valuation on any deal, but the firm is thought to be worth less than $500m.

EDS said in May that the company expects to spin-off the money-losing consulting arm to its partners by the end of the year, for a price in the range of several hundred million dollars.

There were reports in January that an earlier effort to sell Kearney had failed because it could not fetch the asking price.

EDS, which is the US's largest IT services company by revenue with $21bn in sales last year, bought Chicago-based Kearney in 1995 for about $300 million.

In 2001, Kearney accounted for $1.2 billion of Electronic Data's sales, or an average of $400 million a quarter. That declined to $1.01 billion in 2002, $846 million in 2003, and $806 million in 2004, according to regulatory filings.

This year the consultancy had a first-quarter operating loss of $11 million after revenue declined 12 percent, to $204 million.

Kearney employs about 3,227 people in 35 countries.
 
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