NTT DATA Inc. has closed on its $3.1 billion acquisition of Dell Services.
The newly acquired business, which on an interim basis will be called NTT DATA Services, expands NTT DATA’s ability to deliver insights, solutions and outcomes that lead to tangible business results for clients.
“Welcoming Dell Services into NTT DATA is a milestone acquisition in our effort to partner with clients as they navigate the digital disruptions in today’s markets,” said Toshio Iwamoto, president and CEO of NTT DATA Corporation. “As a top 10 global business and technology services provider, we have been aggressively expanding our international business, boldly pursuing growth as a ‘Global IT Innovator.’ The acquisition of Dell Services is another step toward achieving our vision of becoming a top five global IT services leader.”
NTT Data acquired Dell Services divisions to strengthen its footprint in North America, and enhance cloud service and business-process outsourcing, or BPO service, according to its filing. The company will hire the 28,000 employees located mainly in North America and India from Dell, according to the statement.
John McCain, CEO of NTT DATA, Inc., will have overall responsibility for leading the business, which will be based in Plano.
“With our combined expertise, services and resources, there’s simply no better team to enable clients to stay a step ahead in highly competitive markets,” said McCain. “We have extremely complementary portfolios. More importantly, both companies have always had an unwavering dedication to client success. Our clients and employees are very enthusiastic about the opportunities this acquisition creates.”
The acquisition would be NTT Data’s largest, helping increase its sales outside Japan, where a shrinking and aging population has stymied economic growth. Dell, which paid $3.9 billion for what was formerly known as Perot Systems in 2009, is selling some assets before completing a record deal — the $67 billion takeover of software and storage systems provider EMC Corp.
Dell plans to sell the division as part of a wider effort to raise as much as $10 billion from the disposal of assets that aren’t core to its business, Re/code reported earlier.
NTT Data has spent more than 72 billion yen ($634 million) buying companies since 2011, about 62 billion yen of it outside Japan, according to data compiled by Bloomberg. Overseas sales had risen to 450 billion yen by the year ended March 31, 2015, compared with more than 208 billion yen in the 12 months to March 2012.
The NTT unit has spent more than 72 billion yen on buying companies since 2011, about 62 billion yen of it outside Japan, according to data compiled by Bloomberg. By the year ending March 31, 2015, overseas sales had risen to 450 billion yen, compared with more than 208 billion yen in the 12 months to March 2012.
“Perot 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, said before the deal was announced. “NTT Data can win big contracts in Japan, but in the U.S., it is less well-known.”
The systems unit of Japan’s former telephone monopoly has more than doubled in market value since 2011 on rising sales to financial and healthcare businesses using the company’s data centers and software. Profit will probably surge 85 percent to a record 59.6 billion yen for the year ending March 31, according to average analyst estimate.
NTT Data services are used at hundreds of hospitals and thousands of healthcare facilities in the U.S., according to the company’s website. The Tokyo-based company provides software and systems for functions including electronic medical records, surgery management, billing, insurance claims.
Dell acquired Perot with plans to expand in the fast-growing market for data services. Perot was built H. Ross Perot, the billionaire who ran for U.S. president in 1992 and 1996, and sold his first major company Electronic Data Systems to General Motors for $2.5 billion in 1984.
Dell’s Perot unit has won government contracts for healthcare IT services and work for the Defense Department, NASA, Homeland Security and Education departments.