Japan’s NTT Data Corp is all set to buy Dell’s information technology consulting unit for over $3billion, in an effort to grow into North America and to boost its service business.
Japan's NTT Data To buy Dell IT Services Unit for $3billion
The buyout will enable Dell Inc. to service part of the $43 billion debt it is incurring to pay for its purchase of EMC Corp, an acquisition that will cost up to $60 billion.
NTT Data indicated that it would pay up to $3.05 billion, which is not inclusive of advisory fees and debt.
NTT Data, which is one of the biggest technology services companies in the world will benefit from a bigger foothold in North America, following the sale.
The Japanese company is keen on expanding into the healthcare, insurance and financial sectors to offer IT consulting services.
So far, Dell has syndicated $100 million of its debt for the acquisition of EMC, according to insider reports. This amount is set to increase to as much as $750 million following strong demand. The extra money will be used to trim some of the expensive loan tranches.
Initially, up to eight banks were participating in financing the first loan tranche but that number has increased to 25. More banks are expected to join in before the completion of the syndication in the coming week.
Dell’s IT services unit is a leading provider of technology consulting services to government agencies and hospitals. Formerly known as Perot Systems, the unit was founded by former US presidential candidate Ross Perot in 1988 and was acquired in 2009 by Dell for $3.9 billion.
Since acquiring it, Dell has aggregated the unit with other divisions, which will not be included in the sale. Following the EMC acquisition, Dell saw some of the IT unit’s capabilities as being redundant.
Dell is also in talks with private equity firms in a bid to sell Quest Software, which supports IT management and SonicWall, a data security and email encryption software.