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September 22, 2009

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Dell agrees to buy IT firm Perot

DELL Inc said yesterday it has agreed to buy the information technology services company Perot Systems Corp for about US$3.9 billion as it looks to expand beyond the personal computer business.

Round Rock, Texas-based Dell said it will offer US$30 per share in cash for Perot, which is based in Plano, Texas. That represents a 68 percent premium over Perot's closing share price on Friday, and Perot shares shot up almost 66 percent in pre-market trading yesterday.

Dell said Perot, founded by former presidential candidate Ross Perot, will expand the company's IT services offerings for businesses and widen the pool of potential customers for its computers.

It expects the deal to close in the November-January quarter and start boosting its earnings beginning in fiscal 2012.

Funds raised

Analysts have been expecting acquisitions from Dell, which hired IBM Corp's former mergers and acquisitions chief earlier this year and has raised almost US$1 billion by selling debt securities since March.

The company's revenue comes mainly from the hard-hit PC business, while competitors like Hewlett-Packard Co have a wider set of products. As a result Dell's second-quarter profit slumped 23 percent.

The company said Perot will become Dell's service unit, led by Perot CEO Peter Altabef. Ross Perot Jr, the head of Perot's board, will be considered for a director slot at Dell.

Ross Perot Sr, who serves as Perot's chairman emeritus, founded the company in 1988. By last year it had about US$2.8 billion in annual sales.

Before that Perot had spent 22 years with Electronic Data Systems Corp, also a technology services provider, which he founded in 1962.

He sold the company to General Motors Corp in 1984.



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