Dell acquires 100% stake in Perot Systems

Dell, Inc., a designer, manufacturer, and seller of computer systems and services, has acquired all of the outstanding shares of Perot Systems Corporation. Both the companies are based in the US.

Perot Systems is a provider of information technology services and business solutions.

Update on November 2, 2009:

Dell has completed its tender offer to acquire all of the outstanding shares of Perot Systems. A total of approximately 108,774,629 shares, representing 87.7% stake, of Perot Systems have been tendered in the offer. An additional 3,961,266 shares were tendered by notice of guaranteed delivery.

Dell intends to acquire the remaining shares of Perot Systems through a short-form merger.

Update on October 2, 2009:

Dell has commenced its tender offer to acquire all of the outstanding shares of Perot Systems.

The tender is scheduled to expire on November 2, 2009, unless extended.

Announcement (September 20, 2009):

Dell has entered into a definitive agreement to acquire all of the outstanding shares of Perot Systems for approximately $3,900 million.

Under the terms of the agreement, Dell will commence a tender offer to acquire all of the outstanding Class A common stock of Perot Systems for $30 per share in cash. The offer price represents approximately 68% premium to the closing price of Perot Systems share on September 18, 2009. Dell plans to fund the transaction with existing cash and commercial paper.

The Board of Directors of Dell and Perot Systems have approved the transaction.

Pursuant to the transaction, Perot Systems will become Dell's services unit. The transaction is expected to close in Dell's November-January fiscal quarter of 2009.

Goldman, Sachs & Co. is acting as financial advisor to Perot Systems and Morgan Stanley is acting as financial advisor to Dell.

Deal Value (US$ Million) 3900
Deal Type                Acquisition
Sub-Category             100% Acquisition
Deal Status              Completed: 2009-11-03

Deal Participants

Target (Company)   Perot Systems Corporation
Acquirer (Company) Dell, Inc.

Deal Rationale

The acquisition will allow Dell to better position itself for immediate and long-term growth and efficiency. The acquisition combines Dell's global reach and significant services business with Perot Systems' services portfolio to deliver broader enterprise services to more customers. The transaction will also expand the range of Dell's commercial IT solutions by leveraging Perot Systems' enterprise services across a broad customer base that spans multi-national and large corporations, government, health-care, educational institutions, and small and medium businesses. Further, Perot Systems' expertise in infrastructure and operations, business processes, application development services, and relationships in commercial and public sectors, strongly complements Dell's existing services offerings and global customer relationships. The combination increases Dell's enterprise and services base to $16,000 million, with services revenue of approximately $8,000 million over the past four quarters. Perot Systems also brings a scope of service offerings, including consulting, infrastructure, and operations; application development and business process outsourcing; and relationships and expertise in financial-services, government, and health-care customer segments. The combination enables significant diversification, from both a business and geographic perspective. The combined company will have additional services/products to offer and, geographically, a broader, worldwide customer base. On the cost side, both the companies have over $4,000 million of shared annual spending. The transaction is expected to see significant opportunities in this combination to capture cost synergies. It is expected that getting at 6% to 8% or approximately $300 million of these costs over two years in the integration is achievable.

Bid Premium ($ per share) 68

Related terms: acquisition, business, commercial, computer, consulting, diversification, government, health, information technology, manufacturer, merger, revenue