Dell to buy Perot Systems for almost $4B

Computer giant Dell has acquired healthcare business solutions provider – and fellow Texas company – Perot Systems in a deal worth almost $4 billion.

The acquisition, approved on Sunday by the boards of directors of both companies, is valued at roughly $3.9 billion and gives the Round Rock, Texas-based computer company an even larger foothold in healthcare. Perot, based in Plano, Texas, provides a wide range of IT services, including applications, technology, infrastructure, business processes and consulting.

The deal marks Dell’s continued effort to expand. The company is the second-largest maker of personal computers, behind Hewlett-Packard, and has reportedly been eyeing several healthcare-related investments for some time. Earlier this year, the company hired a new mergers and acquisitions chief from IBM, and it has raised almost $1 billion in debt since March.

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“This transaction represents a great opportunity for our company and our associates,” said Ross Perot Jr., Perot’s chairman of the board. “Today’s announcement is the next step in formalizing a relationship that has flourished for some time. When my father founded Perot Systems he envisioned a global information-technology leader. The new, larger Dell builds on that promise and its own successes by taking Perot Systems’ expertise to more customers than ever.”

“We consider Perot Systems to be a premium asset with great people that enhances our opportunities for immediate and long-term growth,” added Michael Dell, Dell’s CEO and board chairman. “This significantly expands Dell’s enterprise-solutions capabilities and makes Perot Systems’ strengths available to even more customers around the world. There will be efficiencies from combining the companies, but the acquisition makes such great sense because of the obvious ways our businesses complement each other.”

Under terms of the deal, Dell will begin a tender offer to acquire all of Perot’s outstanding Class A common stock for $30 per share in cash. Once the acquisition is completed, Perot will become Dell’s services unit and be led by Peter Altabef, Perot’s current CEO.

Officials say the combined company represents $8 billion in services revenue.

Earlier this year, Dell and Perot announced a strategic alliance to provide full integrated IT solutions to healthcare organizations seeking to qualify for federal stimulus funding through the American Recovery and Reinvestment Act (ARRA). Included in that partnership was a financing program to Perot’s healthcare clients through Dell Financial Services.

"The stimulus plan can have a far-reaching, positive impact on the quality of healthcare in our nation, and these financing options will help some clients bridge the gap between current investment needs and meeting the requirements necessary to take full advantage of the funds that become available in 2011," said Chuck Lyles, president of Perot Systems' healthcare group. "Perot Systems collaborated with Dell to help make that happen - to give healthcare providers the financial tools they need to accelerate their IT projects."

On Sept. 10, Dell officials announced the launch of an EMR system for hospital-affiliated physician practices, with Tufts Medical Center in Boston and the Memorial Hermann Healthcare System in Houston as early adopters. The company’s goal is to target the roughly 90 percent of U.S. physicians who haven’t adopted a fully functional EMR and practice management system.

"The U.S. healthcare system is suffering from a digital divide that we can no longer afford," said Jamie Coffin, MD, vice president of Dell's healthcare and life sciences division, at that time. "With our hospital partners we are knocking down EMR's barriers to accelerate its adoption, and in doing so we'll create the communities of practices and information-sharing infrastructure necessary to achieve reform priorities today and personalized medicine in the future."

Just last week, Perot officials announced a 10-year, $18 million contract to supply IT outsourcing and electronic health records implementation for Max Healthcare in India, the company’s first IT outsourcing project in India and a significant step in the company’s efforts to extend its healthcare footprint outside North America.

Word of the deal sent Dell’s stock shares down 81 cents, or 4.85 percent, to $15.88 in Monday morning pre-market trading, while Perot’s stock price rose 66 percent, or $11.78, to $29.69.