Dell buys Perot Systems for $3.9 billion

Dell buys Perot Systems for $3.9 billion

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. But even with the acquisition, Dell’s services arm would remain far smaller those of rivals Hewlett-Packard and IBM.

Perot Systems, handles a wide range of technology services, including data center management, software and consulting. Perot Systems is “a premium asset with great people that enhances our opportunities for immediate and long-term growth,” Dell said in a statement.

Dell and Perot Systems, which was founded in 1988 by H. Ross Perot, said that the terms of the deal had been approved by the boards of both companies. Perot Systems, which had revenue last year of $2.8 billion, will become Dell’s services unit and be led by Peter Altabef, the Perot Systems chief executive. Ross Perot Jr, the chairman, is expected to join the Dell board.

“Today’s announcement is the next step in formalising a relationship that has flourished for some time,” Ross Perot Jr said in the statement. The combined heft of Perot Systems and Dell’s own services organisation should result in about $8 billion of services revenue annually, according to Dell’s statement. Services deals tend to have far higher margins than selling things like PCs and computer servers.

Since its overall business has slowed significantly in recent years, Dell has been exploring more profitable growth areas. It has been slowly building up its own services division through smaller acquisitions over the last two years. It has claimed to offer lower-priced services than its larger rivals and India-based services firms.

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