On the heels of buyout and investment deals from the likes of Walt Disney, Kraft and KKR, we wake this morning to another deal: Dell’s $3.9 billion takeover offer for computer services maker Perot Systems, Inc. The deal is an all-cash offer, which Dell will pay $30 a share for Perot; a 68% premium over Friday’s close.
The acquisition will allow Dell (DELL:NASDAQ) to expand and serve more customers. Michael Dell, Dell Chairman and CEO, told CNBC, “Now we’re expanding these capabilities to bring more solutions to more customers around the world.”
Round Rock, Texas-based Dell, which has been outspoken about its intentions to step up acquisitions, will purchase all of the outstanding Class A common stock of Plano, Texas-based Perot Systems (PER:NYSE) for $30 per share in cash. Perot shares have shot up 66% in pre-market trading on Monday.
In the press release, Dell said Perot, which was founded by former presidential candidate Ross Perot, will expand the company’s IT services offerings for businesses and widen the pool of potential customers for its computers. The deal is expected to close in the November-January quarter and start having a revenue impact beginning in fiscal 2012.
The Dell acquisition is further evidence that a new wave of buyouts may be taking shape as Fortune 500 companies have been stockpiling cash during the worst economic environment since the Great Depression. The Commerce Department reports that companies now hold $1.5 trillion in cash, as of June 30. According to Credit Suisse Group AG and Bloomberg News, “the amount reached a record in the past 12 months amid the biggest wave of firings since World War II and central bank interest rates near zero percent.”
“You’ll see a steady return to growth in the M&A market,” said Michael Boublik, the chairman of mergers and acquisitions for the Americas at New York-based Morgan Stanley, to Bloomberg News. “Investors are wanting and demanding that companies start thinking about M&A to fuel growth, so therefore deals are being well accepted.”
Even Michael Dell responded favorably when the question of more acquisitions was asked by CNBC’s Joe Kernen: “I would look for more,” answered Dell.
According to the Associated Press, Wall Street analysts had been expecting acquisitions from Dell, which hired IBM Corp.’s former mergers and acquisitions chief earlier this year and has raised almost $1 billion by selling debt securities since March.
All of the takeover talk signals excellent news for the equity markets as increasing confidence among executives could help extend the 58% rally in the Standard & Poor’s 500 Index from the 12-month low set on March 9. According to Bloomberg, a record amount of mergers helped send the benchmark gauge to its October 2007 high.
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