After Failed Talks with Atos and TCS, Dell on Verge of Selling IT Services to NTT for US$3.5 bn

Dell is on the verge of selling its IT services business in a US$3.5-bn deal to NTT, the Japanese telecom giant. While the ground has been laid for the deal to take place, the offer is now expected to be formalized by NTT executives this week as they meet Dell’s CEO, Michael Dell. The deal, if successful, will be one of the largest such transactions in the IT industry this quarter.

It would also mark the closure of a process that began in December when Dell made it known that it was looking to shed its services unit. The unit is, for the most part, made up of a company that was known as Perot Systems. It had been acquired by Dell in 2009 for a whopping $3.9 bn.

Even as Dell looks to sell off its services unit, it has its sights firmly set of acquiring EMC – a company that specializes in data storage equipment. When Dell had first announced (October 2015) its plans of acquiring EMC, the deal was valued at US$67 bn. EMC’s debts amount to US$50 bn, and Dell has stated in the past that it is willing to take on the debt. Market watchers opine that Dell hopes to raise cash for its pet deal by selling its services unit to NTT.

The company’s other assets, which feature software operations such as SonicWall and Quest, could also be up for sale if Dell decides that it needs more cash for its big-ticket deal. If sources are to be believed, it is expected that Dell hopes to raise about US$10 bn in cash from the sale of its assets.

A report on re/code on the subject said that the website’s attempts to get in touch with a Dell spokesman went unanswered. If NTT buys Dell’s services arm, it would have beat two other bidders who were extremely close to bagging the deal. These are France-based Atos and India’s TCS.


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