Dell Sells Its Technology Services For $3 Billion to Japan’s NTT

Dell Sells Its Technology Services For $3 Billion to Japan’s NTT

Dell has agreed to sell its technology services unit to NTT Data Corp, a division of a Japanese company that enjoyed a virtual monopoly in the telecom sector. In a statement to the domestic stock exchange, Nippon Telegraph & Telephone Corp (NTT) disclosed the acquisition. However, it failed to provide the date of its acquisition of the American units or the likely timing of the closure of the transaction.

Strengthen Presence In North America

The Japanese firm was clear in its objective, i.e. to strengthen its presence in North America, apart from improving its business-process outsourcing (BPO) service or cloud service. The company indicated that it would appoint 28,000 employees in India and North America from Dell. The company is hard-pressed to look for growth outside their country due to a shrinking and aging population thwarting economic growth. In any case, the deal is the biggest for the company in its history.

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In 2009, the American firm purchased Perot Services, which is now its technology services, for $3.9 billion. The recent sale is part of its efforts to divest certain assets before completing the takeover deal of $67 billion by EMC Corporation (NYSE:EMC). The American company is seeking to sell certain assets, which were not part of its core business, and realize $10 billion from such divestments.

Focus On Overseas Sales

As far as the Japan-based NTT is concerned, the focus is on boosting its overseas sales. It was for this reason the company has been spending over $634 million in acquiring companies since 2011. As a result, its overseas sales more than doubled to 450 billion yen at the end of March 2015 from over 208 billion yen in March 2012.

There were several bidders for Perot Systems before it was acquired by Dell. For instance, India-based Tata Consultancy Services and Cognizant Technology Solutions Corp (NASDAQ:CTSH) and Atos SE participated in the auction process. However, none of them could reach a deal.