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Japan’s NTT Data Corp on Monday said it has agreed to buy Dell’s information technology consulting division for over $3 billion to expand in North America and bolster its services business.
The move will allow US computer maker Dell to trim some of the $43 billion in debt it is taking on to fund its pending cash-and-stock acquisition of data storage provider EMC Corp, a deal worth close to $60 billion.
The Japanese company said it would pay around $3.05 billion, an amount that excludes debt and unspecified advisory fees.
The sale will also offer NTT Data, one of the world’s largest technology services companies, a bigger foothold in the US, where it is looking to expand in healthcare IT, insurance, and financial services consulting.
EMC acquisition Dell has made progress in syndicating $10 billion of its financing package for the EMC acquisition, dubbed ‘term loan A’, people familiar with the situation said earlier. This is expected to be increased in size by $500 million to $750 million due to strong demand, with the extra money to be used to downsize some of the more expensive tranches of the remaining $33 billion in financing, the people added.
Formerly known as Perot Systems, Dell’s IT services division is a major provider of technology consulting to hospitals and government departments. Founded in 1988 by former US presidential candidate Ross Perot, it was acquired by Dell in 2009 for $3.9 billion.
However, Dell has since divested some of the unit’s operations and integrated some others, which it is not including in the sale. Some of the unit’s capabilities were seen by Dell as redundant in the wake of the acquisition of EMC.
Dell has also been speaking to private equity firms about selling Quest Software, which helps with information technology management, as well as SonicWall, an e-mail encryption and data security provider, Reuters had previously reported. Together, Quest and SonicWall could be worth up to $4 billion.
Dell’s acquisition of EMC, which is backed by founder and Chief Executive Michael Dell, as well as private equity firm Silver Lake Partners, is subject to approval by EMC shareholders. EMC is expected to hold a shareholder vote on the Dell deal in May, allowing for the transaction to be completed sometime between July and October.
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