struck a deal to acquire computer services provider Perot Systems Corp.
for roughly $3.9 billion.
Compared to the company’s previous market value, Dell (News - Alert) offered a steep 67.5 percent premium to its last trading price.
Additionally, Dell plans to launch a tender offer to acquire all of the outstanding Class A common stock of Perot Systems for $30 per share in cash.
Michael Dell, CEO and chairman of Dell, said that they consider Perot Systems to be a premium asset and that the acquisition expands Dell’s enterprise-solutions capabilities with its newly acquired complimentary Perot Systems.
The deal represents the latest trend of computer hardware makers pushing into the higher margin technology services business, as a way to create a stable, recurring revenue stream for companies that may be dealing with a different economic time.
"This is a logical move for Dell and not unexpected as the company has been shoring up its M&A team,” Rich Tehrani (News - Alert), TMC
CEO said. “Consulting and systems integration like many other sectors is under margin pressure, but it is an area with growth and IBM (News - Alert) has shown a combination of technology leadership and systems integration depth can lead to relatively strong margins."
Ross Perot Jr., chairman of Perot Systems, said that this transaction represents an opportunity for the company to formalize a relationship which has been developing for some time.
“When my father founded Perot Systems he envisioned a global information-technology leader,” Perot Jr. said. “The new, larger Dell builds on that promise and its own successes by taking Perot Systems' expertise to more customers than ever."
According to Dell officials, the company indicated that the purchase of Perot Systems was an attempt to step up acquisitions.
The acquisition will merge two information-technology brands resulting in Dell’s ability to provide a broader range of IT services and systems to its clients by extending the reach of Perot System’s capabilities.
Dell's global commercial customer base spans large corporations, government agencies, health-care providers, educational institutions, and SMBs. Perot Systems’ applications, technology, infrastructure, business processes and consulting will be integrated into the Dell brand to ensure upgraded systems for existing Dell customers.
Last year, Hewlett-Packard (News - Alert) priced the same deal with Perot at a lower value. Analyst Shannon Cross of Cross Research said that the acquisition is expensive, and that “Dell does not appear to expect significant cost synergies but rather expects to benefit from cross sales.”
The transaction is subject to government approvals and the satisfaction of other customary conditions, and is expected to close in Dell’s November-January fiscal quarter.
Once the acquisition is complete, Perot Systems will become Dell's services unit and be led from by Peter Altabef, the current Perot Systems CEO.