- The Washington Times - Tuesday, September 22, 2009

NEW YORK | 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. Perot Systems’ shares rose $11.65, or 65 percent, to close at $29.56.

Dell shares fell 68 cents, or 4.1 percent, to $16.01.

Former presidential candidate H. Ross Perot Sr., 79, serves as chairman emeritus of Perot Systems, which he founded in 1988. According to an April regulatory filing, Mr. Perot and related trusts controlled at least 25 percent of the company’s stock.

Mr. Perot made a fortune from founding Electronic Data Systems Corp. in 1962 and selling it 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, including the U.S. military and the Department of Homeland Security. About 48 percent of Perot Systems’ 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, and its revenue comes mainly from the hard-hit PC business. As a result, Dell’s profits have been slumping, down 23 percent in the second quarter.

Perot Systems would add consulting and other kinds of computing services, such as “systems integration,” 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.”

Analysts have been expecting acquisitions from Round Rock, Texas-based Dell, which hired IBM’s former mergers and acquisitions chief this year and has raised almost $1 billion by selling debt securities since March.

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