NTT Buys Dell Services Business for $3.05 Billion

NTT Data, the services arm of Japan’s telecom and technology company NTT Group, has reached a deal to acquire the IT outsourcing arm of privately held computing giant Dell for $3.05 billion, the companies announced today.

NTT said the deal will increase its footprint in North America, where Dell Services, once an independent company known as Perot Services, has a strong presence in handling the technology needs of companies in the financial services and health care industries, as well as government agencies.

It’s also NTT Data’s largest deal to date. The company’s CEO, John McCain, will lead the combined company. Sources familiar with the deal say Suresh Vaswani, the president of Dell Services and a 26-year veteran of the Indian IT firm Wipro, is likely to leave after closing, but will remain on the job reporting to Michael Dell until then.

The sale is expected to be the first of several of Dell’s assets as it seeks to raise cash to help pay for its acquisition of data storage company EMC. In that deal, Dell has proposed to borrow more than $50 billion in order to take EMC private in a deal that was worth a combined $67 billion when it was first announced in October, but is now worth closer to $60 billion. CEO Michael Dell has promised to “rapidly de-lever” the company after closing on EMC.

Other assets likely to be shopped include Quest Software, which Dell acquired in 2012 for $2.4 billion. The sales are intended to raise as much as $10 billion to help pay down expected debt.

Today’s sale will be seen as an important signal to debt markets ahead of the first sales of Dell’s bonds. On that subject, Reuters reported today that Dell has “made progress” in sorting out the details of its huge debt offering. The group of banks said to be participating has grown from eight to 25, with more expected to join before the process is completed next week, the report said, citing sources.

The deal confirms a Re/code report from Sunday, though the final price is slightly lower than what we reported. Dell acquired Perot Systems in 2009 for $3.9 billion. The company was founded in 1988 by Ross Perot, the Texas billionaire and 1992 presidential candidate.

During a sale process that began in the fall, Dell approached several international IT consultancy companies including India’s Tata Consultancy Services, Genpact, a U.S.-based firm and CGI, a Canadian IT company. Talks with the French IT services firm Atos reached an advanced stage in January, but ended over disagreements on price and as a result of a decline in Atos’ share price.

Srinivas Katam

Do you need help growing your business? Srinivas Katam is a Digital Marketing Strategist and Consultant with over 200 successful SEO and Social Media client engagements completed. I’ve worked with brands across the world as a digital marketing consultant to deliver revenue growth from content-focused inbound marketing campaigns. He is an Innovative Marketer who specializes in digital marketing, specifically in social media, SEO and online strategy.

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