Under the agreement, Dell will buy up Perot's outstanding Class A shares for $30 per share—a significant premium over Friday's $17.91 closing price.
Dell said it hopes the transaction, subject to closing conditions, will be completed sometime during the company's November-January fiscal quarter.
Current Perot Systems CEO Peter Altabef is expected to continue leading the operation. Plans also call for Perot chairman Ross Perot Jr. to join Dell's board. Dell said it believes the acquisition will contribute positively to earnings by 2012.
In acquiring Perot, Dell is following in the footsteps of IBM and HP—computer industry giants that in recent years have sought to build out higher margin IT services and outsourcing businesses to compensate for diminishing margins in the increasingly commoditized hardware market. Pairing services with hardware can also appeal to customers who prefer to deal with fewer vendors.
IBM's Global Services unit has accounted for about half the company's revenues in recent years. HP, meanwhile, dramatically stepped up its presence in the outsourcing market with the $13.9 billion buyout of Electronic Data Systems last year. EDS, like Perot Systems, was founded by billionaire H. Ross Perot and is part of the Dallas area's tech services corridor.
Dell CEO Michael Dell said he believes the acquisition of Perot will bolster his company's top and bottom lines. "We consider Perot Systems to be a premium asset with great people that enhances our opportunities for immediate and long-term growth," said Dell, in a statement.
Perot's customer base includes numerous Fortune 500 companies, as well as federal, state, and local government agencies.
"This significantly expands Dell's enterprise-solutions capabilities and makes Perot Systems' strengths available to even more customers around the world," Dell added. Ross Perot Jr. said the combination would help fulfill his father's vision of making Perot Systems "a global information technology leader."
The deal isn't without risk for Dell. Outsourcing sales have slowed during the recession, and offshore competitors such as India's Infosys are gaining share in the market by combining global capabilities with aggressive pricing.
The merger would leave the North American IT services market with just two major, independent tech services firms—Affiliated Computer Services, which is also based near Dallas, and Los Angeles-headquartered Computer Sciences Corp.
The question is whether those firms now become targets for acquisition, and by whom. It's unlikely HP or Dell would consider a second major buyout in the market, and any move by industry leader IBM could be blocked by antitrust watchdogs in Washington. That leaves software companies like Oracle and Microsoft, faced with commoditization in their own markets, as potential players.
Perot Systems shares were trading at $29.66 in pre-market activity Monday. Dell shares were trading at $15.98, off slightly from Friday's closing price of $16.69.
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