Who benefits most from Dell buying Perot Systems for $3.9 billion?

Michael Dell, Chairman and CEO of Dell, speaks at the IoD Annual Convention at the Royal Albert Hall in London.

Computer maker Dell announced this morning that it will acquire Perot Systems, the IT services company founded by former presidential candidate Ross Perot, for $3.9 billion.

The two Texas companies will join forces to help Dell push beyond the personal-computer sector and provide Perot with a greater "global reach."

Currently led by the presidential candidate's son, Ross Perot Jr., Perot Systems designs business software for the banking, government, and health-insurance industries.

"When my father founded Perot Systems he envisioned a global information-technology leader," said the younger Perot. "The new, larger Dell builds on that promise and its own successes by taking Perot Systems’ expertise to more customers than ever.”

If government approval goes smoothly, Dell will buy the outstanding common stock of Perot Systems at $30 per share and formally close the deal in the next few months. Perot System's stock closed Friday at $17.91, significantly less than the premium-priced offer from Dell. Together, Dell and Perot represent a $16 billion company, with $8 billion in technology services, according to statements from both companies.

"Michael Dell, the company’s founder and chief executive, has spent much of the recession talking about directing his company’s cash stockpile toward acquisitions, particularly in the services arena," reports the NYTimes. "By agreeing to buy Perot Systems, for $30 a share in cash, Dell has made just such a purchase. But even with the acquisition, Dell’s services arm would remain far smaller those of rivals Hewlett-Packard and I.B.M."

One of the attractive features of Perot Systems is the multi-year contracts that it signs with clients – deals that remain relatively steady during economic fluctuations.

"Perot’s sales will probably decline 9 percent this year," according to Bloomberg's analysis. "Dell’s revenue will drop 16 percent.... IBM’s sales fell 13 percent last quarter, while Hewlett- Packard’s total revenue dropped about 2 percent. The companies have benefited from long-term services contracts to maintain corporations’ computers and networks."


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