Daily Management Review

Dell's Perot Systems Acquisition Bid Led by NTT Data: Reuters


Dell's Perot Systems Acquisition Bid Led by NTT Data: Reuters
Despite the fact that there are differences between the two over prices, Japan's NTT Data Corp is in exclusive negotiations to acquire Perot Systems, the information technology consulting division of Dell Inc, reports news agency Reuters quoting sources.
As NTT Data seeks to expand in the United States and boost its offering in so-called knowledge process outsourcing, which has become popular with businesses looking to cut costs, the deal would be the most significant overseas acquisition for the company.
Cautioning that no deal is certain, the sources said that though it has yet to agree on a price with Dell, which has been seeking more than $5 billion in a potential divestment, NTT Data has so far prevailed in an auction for Perot Systems.
One of the sources said that if it cannot agree a deal with Dell for the entire division, NTT Data may seek to buy only parts of Perot Systems. Reuters reported quoting a source that the talks between the two companies are expected to continue for the rest of the month.
The sources did not want to be identified as the negotiations were every confidential. Representatives of NTT Data and Dell did not immediately respond to requests for comment, reports Reuters.
Hospitals and government departments are the main clients for the IT consulting and solutions of Perot Systems. The company was acquired by Dell in 2009 for $3.9 billion and it was founded in 1988 by former U.S. presidential candidate Ross Perot.
Following its cash-and-stock deal to acquire data storage company EMC Corp, Dell is hoping a sale of Perot Systems will help it trim its debt load. When it was agreed last October, the agreement was worth $67 billion. Subject to approval by EMC shareholders, the deal is scheduled to close between May and October.
As a result of the deal Dell will have $49.5 billion. Citing the Lunar New Year holidays in China, the deadline was pushed back by banks syndicating the first $10 billion chunk of loans backing the deal with EMC last week for commitments by debt investors.
In the previous auction bids for Perot Systems, there was participation by Business services companies Cognizant Technology Solutions Corp, Tata Consultancy Services Ltd and Atos SE.
Quest Software, which helps with information technology management, as well as SonicWall, an e-mail encryption and data security provider were also sought to be sold out by the company and Dell had been speaking to buyout firms. However the rout in the leveraged finance market has routed these negotiations. Together, Quest and SonicWall could be worth up to $4 billion.
One of the world's largest technology services companies, NTT Data is based in Tokyo. Generating more than $100 billion in annual revenues, the company is present in more than 40 countries. It has a market capitalization 1.55 trillion yen ($13.65 billion).