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September 21, 2009
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Commonly seen as a move countering rival Hewlett Packard's (HPQ) acquisition of EDS back in May, this morning Dell, Inc. (DELL) announced it will buy Perot Systems (PER) for $3.9 billion -- $30 per share of Class A common stock. Perot Systems was founded by former presidential candidate Ross Perot in 1988; Perot founded EDS a quarter-century earlier.
The price tag amounts to a 68% premium in PER shares from Friday's close, and today the stock is trading accordingly -- up nearly $12 per share so far this morning. As for DELL shares, the tech giant is down over 5% at this point today, perhaps on concerns about the price and/or the nuts and bolts of implementing Perot Systems into Dell's technology services group.
It had been increasingly clear that Dell would need to make some sort of move to stay competitive with global technology giants like H-P, and the Perot Systems acquisition does not come as a surprise to many. Senior Zacks analyst Ian T. Gilson, CFA, Ph.D had previously given DELL shares an Underperform recommendation, which followed disappointing quarterly results earlier this year and a recent history of struggling with inconsistent earnings results. The Perot Systems acquisition should ultimately give Dell a boost in the areas where the company needs the most help.
This is clearly great news for PER shareholders. Until now considered generally a middling stock by Zacks Consensus Estimates, this is a welcome payday for patient investors in the mid-cap tech services company.
Read the full analyst report on "DELL"
Read the full analyst report on "PER"
Read the full analyst report on "HPQ"
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