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Japanese company, NTT Data, to buy Dell Services for $3.06 billion

by Gail Kalinoski, Contributing Reporter | March 30, 2016
Business Affairs Health IT
Dell Headquarters
via Wikimedia Commons
Buying Dell Services, an IT services provider owned by Plano, Texas-based Dell Inc., will help Japan’s NTT Data become an “IT and BPO solutions powerhouse for the health care industry,” according to a joint statement from the companies announcing a $3.06 billion acquisition plan.

Officials for NTT Data, a unit of Japan’s former telephone monopoly, and Dell said Monday they had entered into a definitive agreement for NTT Data to acquire Dell Services, the information technology business it bought in 2009 from Perot Systems for $3.9 billion. Dell is shedding assets as it prepares to complete the biggest technology deal on record – the planned $67 billion takeover of software and storage systems provider EMC, according to Bloomberg.

Dell is trying to eliminate some of the $43 billion in debt it would take on to close the EMC deal, expected to close in the third quarter, Reuters reported.

No date was given for the NTT Data deal to be finalized. It would be the Japanese company’s biggest expansion overseas.

The acquisition of Dell Services, a major provider of technology consulting to hospitals and government departments, would allow NTT Data to expand into the health care IT, insurance and financial services consulting business in the United States. NTT Data already provides software and systems to U.S. hospitals and other health care facilities for electronic medical records, surgery management, billing and insurance claims, The Dallas Morning News reported.

Bloomberg noted NTT Data has more than doubled in market value since 2011 due to increased sales to health care and financial businesses. Dell Services is known for its offerings in infrastructure services, cloud services, application services and business processing outsourcing (BPO), particularly in the health care and insurance industries, according to the company statement.

“There are few acquisition targets in our market that provide this type of unique opportunity to increase our competitiveness and the depth of our market offerings,” John McCain, CEO of Tokyo-based NTT Data, said in the prepared statement. “Dell Services is a very well-run business and we believe its employer base, long-standing client relationships, and the mix of long-term and project-based work will enhance our portfolio.”

“This acquisition will create even more value for our customers and will benefit employees as they become part of a 'top ten' global IT services business,” Suresh Vaswani, president of Dell Services, said in the news release.

Analysts said the deal is an example of a Japanese company looking to expand overseas to counter the aging population in Japan that is limiting growth.

“Perot (Dell Service) 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, told Bloomberg. “NTT Data can win big contracts in Japan, but in the U.S. it is less well-known.”

Wells Fargo acted as lead financial advisor to NTT Data. J.P. Morgan Securities L.L.C. and Credit Suisse Securities (USA) L.L.C. also acted as financial advisors to NTT Data. Citigroup was the lead financial advisor for Dell Inc.

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