DELL SNAPS UP PEROT FOR $4BN
PCGIANT Dell announced yesterday that it plans to buy computer services firm Perot Systems for about $3.9bn (£2.4bn), in a bid to compete with Hewlett-Packard and IBM.
Dell intends to pay a steep 67.5 per cent premium to expand its technology services business into higher margin IT services, thereby securing more stable and recurring revenues as computer hardware becomes cheaper.
Dell, which has previously indicated its intention to step up acquisitions, said it would pay $30 per share for Perot Systems, compared to Friday’s closing price of $17.91 on the New York Stock Exchange.
Some analysts were surprised at the price Dell is offering for Perot – which was founded by former US presidential candidate Ross Perot – but commended Dell’s strategy of moving away from its reliance on personal computer (PC) sales.
“We do see the building block as being compelling, but the purchase price seems relatively rich,” said JP Morgan analyst Mark Moskowitz, noting that the deal looked expensive compared to HP’s purchase of EDS last year.
Dell is the world’s number two maker of PCs, with roughly 60 per cent of its revenue coming from that market.
The company has been trying to diversify its range of offerings, and services currently comprise only around one-tenth of sales. The firm says it expects the deal to add to its earnings in fiscal 2012.
HP made a foray into the services segment with last year’s $13.2bn purchase of EDS, which was also founded by Ross Perot in 1962.