Ja­pan's NTT to buy Dell sys­tems for $3.055 bil­lion

The Pak Banker - - COMPANIES/BOSS -

NTT Data Corp., a unit of Ja­pan's for­mer tele­phone mo­nop­oly, agreed to buy tech­nol­ogy ser­vices busi­nesses from Dell for $3.055 bil­lion.

The ac­qui­si­tion was an­nounced by the unit of Nip­pon Tele­graph & Tele­phone Corp. in a state­ment to the Tokyo Stock Ex­change Mon­day. The com­pany didn't give a date for when it will ac­quire the Dell units.

NTT Data will ac­quire the di­vi­sions to strengthen its foot­print in North Amer­ica, and en­hance cloud ser­vice and busi­ness-process out­sourc­ing, or BPO ser­vice, ac­cord­ing to its fil­ing. The com­pany will hire the 28,000 em­ploy­ees lo­cated mainly in North Amer­ica and In­dia from Dell, ac­cord­ing to the state­ment.

The ac­qui­si­tion would be NTT Data's largest, help­ing in­crease its sales out­side Ja­pan, where a shrink­ing and ag­ing pop­u­la­tion has stymied eco­nomic growth. Dell, which paid $3.9 bil­lion for what was for­merly known as Perot Ser­vices in 2009, is sell­ing some as­sets be­fore com­plet­ing a record deal -- the $67 bil­lion takeover of soft­ware and stor­age sys­tems provider EMC Corp.

Dell plans to sell the divi­sion as part of a wider ef­fort to raise as much as $10 bil­lion from the dis­posal of as­sets that aren't core to its busi­ness, Re/code re­ported ear­lier.

NTT Data has spent more than 72 bil­lion yen ($634 mil­lion) buy­ing com­pa­nies since 2011, about 62 bil­lion yen of it out­side Ja­pan, ac­cord­ing to data com­piled by Bloomberg. Overseas sales had risen to 450 bil­lion yen by the year ended March 31, 2015, com­pared with more than 208 bil­lion yen in the 12 months to March 2012.

Global ri­vals of NTT Data in­clud­ing Cog­nizant Tech­nol­ogy So­lu­tions Corp., Tata Con­sul­tancy Ser­vices Ltd. and Atos SE had also pre­vi­ously par­tic­i­pated in an auc­tion for Perot Sys­tems that failed to gen­er­ate a deal, ac­cord­ing to the Nikkei, Reuters and the web­site re/code, which all cited peo­ple familiar with the mat­ter.

The NTT unit has spent more than 72 bil­lion yen on buy­ing com­pa­nies since 2011, about 62 bil­lion yen of it out­side Ja­pan, ac­cord­ing to data com­piled by Bloomberg. By the year end­ing March 31, 2015, overseas sales had risen to 450 bil­lion yen, com­pared with more than 208 bil­lion yen in the 12 months to March 2012.

"Perot Sys­tems has a large base of U.S. clients in med­i­cal and other mar­kets, so it fits NTT Data's strat­egy to in­crease its pres­ence there," Hideaki Tanaka, an an­a­lyst at Mit­subishi UFJ Mor­gan Stan­ley, said be­fore the deal was an­nounced. "NTT Data can win big con­tracts in Ja­pan, but in the U.S., it is less well-known."

The sys­tems unit of Ja­pan's for­mer tele­phone mo­nop­oly has more than dou­bled in mar­ket value since 2011 on ris­ing sales to fi­nan­cial and health­care busi­nesses us­ing the com­pany's data cen­ters and soft­ware. Profit will prob­a­bly surge 85 per­cent to a record 59.6 bil­lion yen for the year end­ing March 31, ac­cord­ing to av­er­age an­a­lyst es­ti­mate.

NTT Data ser­vices are used at hun­dreds of hos­pi­tals and thou­sands of health­care fa­cil­i­ties in the U.S., ac­cord­ing to the com­pany's web­site. The Tokyo-based com­pany pro­vides soft­ware and sys­tems for func­tions in­clud­ing elec­tronic med­i­cal records, surgery man­age­ment, billing, in­surance claims.

NTT Data cash, near cash and short-term in­vest­ments stood at 183.1 bil­lion yen as of Dec. 31, ac­cord­ing to data com­piled by Bloomberg.

Dell ac­quired Perot with plans to ex­pand in the fast-grow­ing mar­ket for data ser­vices. Perot was built H. Ross Perot, the bil­lion­aire who ran for U.S. pres­i­dent in 1992 and 1996, and sold his first ma­jor com­pany Elec­tronic Data Sys­tems to General Mo­tors for $2.5 bil­lion in 1984. Dell's Perot unit has won gov­ern­ment con­tracts for health­care IT ser­vices and work for the De­fense Depart­ment, NASA, Home­land Se­cu­rity and Ed­u­ca­tion de­part­ments.

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