Three major business services companies are in the running to buy Perot Systems as Dell seeks to reduce its post-EMC acquisition debt load
Three major business services companies are competing to acquire Perot Systems from Dell, as the company looks to reduce its debt load in the wake of its proposed acquisition of EMC, according to a report.
Dell is in negotiations with US-based Cognizant Technology Solutions, Japan’s NTT Data and France’s Atos for the sale of Perot Systems, an IT management business Dell acquired in 2009 for $3.9 billion (£2.6bn), according to a Reuters report, which cited unnamed people familiar with the matter.
Perot Systems, founded in 1988 by former US presidential candidate Ross Perot, provides IT consulting to hospitals and government departments.
Dell is hoping to bring in more than $5bn from the sale in order to help reduce the $49.5bn in debt it currently expects to have following the acquisition of EMC, but the confidential negotiations have taken longer than expected because the offers haven’t met Dell’s expectations, according to Reuters’ sources.
Dell is reportedly reevaluating which contracts it will pass on to Perot Systems in order to boost the business’ value.
The IT giant initially acquired Perot Systems in order to diversify away from its main PC sales business, a strategy its acquisition of EMC is intended to extend into cloud computing, business software and data management.
The $66bn acquisition is intended to complete by October 2016, subject to approval by EMC shareholders.
Dell is also investigating selling Quest Software and email encryption provider SonicWall, which together could be worth about $4bn. The company registered its SecureWorks cyber-security unit for a flotation earlier this month.
Dell has said it is planning to focus on reducing its debt load in the 18 to 24 months following the merger in order to receive an investment-grade rating.
In October HP chief executive Meg Whitman hailed the acquisition as good news for Dell’s competitors, in part because of the large debt load Dell would be saddled with following it.
Estimating the combined company would be required to pay $2.5bn in interest every year, she said, “That’s $2.5 billion that they will allocate away from R&D and other business-critical activities, which will keep them from better serving their customers,” Whitman wrote in an emailed memo to HP Enterprise staff.
Whitman became chief executive of HP Enterprise when the company split in November.
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