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Archive for September 23rd, 2009

We see this as a good sign for the investment community, the willingness to invest and seek opportunity is a very good indicator that the VC industry is warming up. As M&A serves as an option to IPO, this deal and a score of other show that there is light in the end of this downturn tunnel. This article is by way of The Day.

“Dell Inc. will spend $3.9 billion for the technology services company Perot Systems Corp. in an attempt to expand beyond the PC business and compete more aggressively with Hewlett-Packard Co., which recently bought another tech-services company founded by H. Ross Perot.Dell said Monday it will offer $30 per share in cash for Perot Systems – a 68 percent premium over its closing price Friday.

Former presidential candidate H. Ross Perot Sr., now 79, serves as chairman emeritus of Perot Systems, which he founded in 1988. According to an April regulatory filing, Perot and related trusts controlled at least 25 percent of the company’s stock, though it was not clear who is the beneficiary of those shares. The company did not respond to a request for comment on Perot’s stake.

Perot had already made a fortune from founding Electronic Data Systems Corp. in 1962 and selling the company to General Motors Corp. in a 1984 deal worth $2.5 billion. Hewlett-Packard bought EDS last year for $13.9 billion as it, too, tried to augment its services offerings and diversify beyond hardware.

In a conference call with analysts, Dell’s founder and CEO, Michael Dell, said Perot Systems will serve as an “anchor” acquisition for a global information-technology services business.

Plano, Texas-based Perot Systems would bring Dell more than 1,000 customers in several sectors, including the U.S. military and the Department of Homeland Security. About 48 percent of its revenue comes from the health care industry and 25 percent from government. Last year Perot Systems earned $117 million on sales of $2.8 billion.

Dell’s services business is more basic than those of its larger competitors; Perot Systems would add more lucrative consulting and systems-integration services to Dell’s lineup.

”This would, at least from a product standpoint, put them definitely more competitive with HP and IBM,” said Kaufman Bros. analyst Shaw Wu. “It’s a step in the right direction.”

Read the full article here.

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