Dell agrees to buy Perot Systems for US$3.9B

Perot will become Dell's global services unit

Dell has agreed to buy Perot Systems for around US$3.9 billion in cash, and intends to make the company its global services delivery division, the companies said Monday.

The deal will allow Dell to expand its range of IT services, and potentially allow it to sell more hardware to existing Perot customers, it said.

It will also allow Dell, in the future, to address customer demand for next-generation services including cloud computing, said CEO Michael Dell in a conference call with analysts.

Dell is counting on its international reach to turn Perot into a global services company, Dell CFO Brian Gladden said during the call.

Perot Systems is one of the largest services companies serving the health-care sector, from which it derives about 48 percent of its revenue, its CEO Peter Altabef said during the call. Around 25 percent of revenue comes from government customers, he said. Perot is already working at increasing its international revenue: on Friday it announced a 10-year deal to outsource IT operations for Indian hospital group Max Healthcare.

Dell's rival Hewlett-Packard expanded its own global services unit with the acquisition of EDS for $13.9 billion in May 2008. EDS was founded by H. Ross Perot, who sold the company to General Motors before going on to found Perot Systems, of which his son is now chairman.

Over the last four quarters, Dell and Perot together had revenue of $16 billion from enterprise hardware and IT services, with $8 billion coming from enhanced services and support, Dell said. Perot's contribution to that is relatively small: In 2008, the company reported total revenue of $2.78 billion.

At $30 per share, Dell's offer represented a significant premium over Friday's closing price of $17.91 for Perot Systems shares. In after-hours trading, the stock traded at $29.70 early on Monday morning.

The boards of Dell and Perot agreed to the terms of the transaction on Sunday, they said. Dell expects to complete the deal in its November-to-January fiscal quarter.

Dell expects that overlaps between the two companies will allow it to cut Perot's costs by between 6 percent and 8 percent, Gladden said during the conference call.

Upon completion of the acquisition, Dell plans to make Perot Systems its services unit, and will put Altabef in charge of the unit. It also expects Ross Perot Jr., chairman of the Perot Systems board, to be invited to join the Dell board of directors.

The services unit will fit alongside Dell's existing divisions for selling to large enterprises, government customers and small and medium-size businesses. Dell created the three divisions in a major reorganization of its business sales teams last December, shifting from a geographic structure to one aligned with customer types.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags Dellperot

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Peter Sayer

IDG News Service
Show Comments

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?