Replies to post #182373 on Wave Systems Corp. (fka WAVXQ)

[Countryboy]

For Dell and Perot Systems, old family friendship lead to $3.9 billion deal

Perot Systems founder expresses admiration for Michael Dell.
By Doron Levin, Connie Guglielmo

BLOOMBERG NEWS


Wednesday, September 23, 2009

SOUTHFIELD, Mich. — Ross Perot Jr. said he began talking "chairman to chairman" with Michael Dell two years ago, relying on an old family friendship, before agreeing to Dell Inc.'s $3.9 billion buyout offer for Perot Systems Corp., which was annouced Monday.

Perot and his father, company founder Ross Perot Sr., initially declined Dell's suggestion that the companies merge, Perot Jr. said in an interview. Dell, the world's second-largest maker of personal computers, and Perot Systems, a provider of computer services, seemed too different, he said.

"I went down to Austin to meet him on Saturday for breakfast a couple of years ago, thinking we were going to do some business together, and Michael broached it," said Perot Jr., chairman of the Plano-based company. "We really liked each other, but I said no. Dell is in the manufacturing business; we're in services. They're as different as football and basketball."

Perot Jr. said talks with Michael Dell, a family friend since the 1980s, "just evolved" over time. Dell convinced the Perot family that the acquisition would benefit both companies by expanding sales. Negotiations heated up in June, culminating this week in Dell's $30-a-share cash offer.

The acquisition vaults Dell into the health care information-technology business, giving the company access to customers such as hospitals and insurance companies.

The Perot family stands to make almost $400 million from the deal. About 25 percent of Perot Systems belongs to HWGA Ltd., which is the family's investment company. Perot Sr., 79, is HWGA's managing partner.

The two blocks of stock together are valued at $952 million at the $30-a-share acquisition price, which is 68 percent more than the family's $568 million stake on Sept. 18, before the deal was announced.

Perot Sr. has an estimated worth of about $5 billion and his son, 52, has a fortune of about $2.2 billion, according to Forbes magazine.

With Perot Systems, which the elder Perot founded in 1988, Dell can expand its services business and challenge IBM Corp. and Hewlett-Packard Co. The combined company stands to benefit from a U.S. economic stimulus package that will pour about $20 billion into health care information technology.

Dell and Perot Systems have been working together in the services market for the past two years. In April, they announced an alliance to create systems for health records.

"To have our company join with Michael Dell's company will make one more than twice as productive as on their own," Perot Sr. said in an interview. "Together, we have a lot more freedom and flexibility to do great work.

"I have watched Michael Dell with great admiration as Dell has grown and am absolutely comfortable as far as culture is concerned, or I wouldn't have done it," Perot Sr. said.

Perot Systems hired Goldman Sachs Group Inc. about a month ago to "give opinions and make sure best practices were observed," Perot Jr. said. Morgan Stanley advised Dell.

Once the acquisition is complete, Perot Systems will become Dell's services unit, headed by Perot's current CEO, Peter Altabef. Perot Jr. will join Dell's board.