Dell broadens IT services offerings with Perot buy

Merger will create an $8 billion firm in combined services and support

In a surprise announcement today, Dell Inc. said it plans to purchase Perot Systems Corp. for approximately $3.9 billion. Terms of the agreement were approved Sunday by both boards of directors, according to a joint announcement today.

Dell will commence a tender offer to acquire all outstanding Class A common stock of Perot Systems for $30 per share in cash, the two companies said.

The acquisition”will result in a compelling combination of two iconic information technology companies, and an expanded Dell will be even better positioned for immediate and long-term growth and efficiency,” the announcement said.

The companies say the merger will mean a broader range of IT services and solutions and optimization of their delivery; a broader reach of Perot Systems’ capabilities, and more Perot Systems’ customers will have access to Dell computer systems.

Over the past four quarters Dell and Perot Systems had a combined $16 billion in enterprise hardware and IT services revenue, according to the announcement.

The merger will create a firm with about $8 billion in combined services and support, said Michael Dell, chairman and CEO of Dell, during a joint conference call today with Ross Perot Jr., chairman of Perot Systems.

Dell said there will be more organic acquisitions and opportunities to grow, “whether it’s government or health care or commercial or the global opportunities.”

Asked how the merger will affect Perot Systems Government Services, which accounts for 27 percent of Perot Systems revenue, Perot said, “It’s an area we focused on intently the past eight years and really built up. We think being teamed up with Dell in government services is very strong for us, especially in our health care practice.”

He said Dell brings a lot of strength and scale to Perot Systems Government Service.

“It brings a tremendous balance sheet if there are certain tuck-in acquisitions we need to make around health care,” Perot said. “And it gives us great customer touch within the government.”

Perot Systems also will be able to expand its federal sales by working with Dell’s federal sales team. “So for us [government is] going to be a big, big target,” he added.

The merger follows by four months Dell rival Hewlett-Packard Co.’s acquisition of EDS Corp., for $13.9 billion.

Once the acquisition is complete, Perot Systems will become Dell’s services unit.

That unit will be led by Peter Altabef, Perot Systems’ chief executive officer, from Plano, Texas. At the same time, Dell’s board of directors is “expected to consider” Perot for appointment to the Dell board.

The transaction, which is subject to customary government approvals and the satisfaction of other customary conditions, is expected to close in Dell’s November-January fiscal quarter.

Dell Computer Corp., of Round Rock, Texas, ranks No. 15 on Washington Technology’s 2009 Top 100 list of the largest federal government prime contractors. Perot Systems Inc. ranks No. 40 on the same list.

Reader Comments

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

What is your e-mail address?

My e-mail address is:

Do you have a password?

Forgot your password? Click here
close
SEARCH
contracts DB

Trending

  • Dive into our Contract Award database

    In an exclusive for WT Insider members, we are collecting all of the contract awards we cover into a database that you can sort by contractor, agency, value and other parameters. You can also download it into a spreadsheet. Read More

  • Is SBA MIA on contractor fraud? Nick Wakeman

    Editor Nick Wakeman explores the puzzle of why SBA has been so silent on the latest contractor fraud scandal when it has been so quick to act in other cases. Read More

Webcasts

  • How Do You Support the Project Lifecycle?

    How do best-in-class project-based companies create and actively mature successful organizations? They find the right mix of people, processes and tools that enable them to effectively manage the project lifecycle. REGISTER for this webinar to hear how properly managing the cycle of capture, bid, accounting, execution, IPM and analysis will allow you to better manage your programs to stay on scope, schedule and budget. Learn More!

  • Sequestration, LPTA and the Top 100

    Join Washington Technology’s Editor-in-Chief Nick Wakeman as he analyzes the annual Top 100 list and reveals critical insights into how market trends have impacted its composition. You'll learn what movements of individual companies means and how the market overall is being impacted by the current budget environment, how the Top 100 rankings reflect the major trends in the market today and how the biggest companies in the market are adapting to today’s competitive environment. Learn More!