NTT Data Corp., a unit of Japan’s former telephone monopoly, agreed to buy technology services businesses from Dell for $3.055 billion. The acquisition was announced by the unit of Nippon Telegraph & Telephone Corp. in a statement to the Tokyo Stock Exchange Monday. The company didn’t give a date for when it will acquire the Dell units.
NTT Data will acquire the 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.
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 Services in 2009, is selling some assets before completing a record deal — the $67 billion takeover of software and storage systems provider EMC Corp.
The move will allow U.S. computer maker Dell to trim some of the $43 billion in debt it is taking on to fund its pending cash-and-stock acquisition of data storage provider EMC Corp, a deal worth close to $60 billion.
“NTT DATA Corporation is a Japanese system integration company and a subsidiary of Nippon Telegraph and Telephone. NTT, started Data Communications business in 1967 and it’s headquartered in Tokyo, with business operations in more than 40 countries, following its privatization in 1985, NTT spun off the Data Communications division as NTT DATA in 1988, which has now become the largest of the IT Services companies headquartered in Japan.”
“NTT DATA is a publicly traded company, but is about 54 percent owned by NTT. Its business areas are in national and local governments, financial, and telecommunication sectors. According to reports in 2012, Forbes Global 2000 recognizes NTT DATA as the 5th largest IT Services company.”
What does this mean for both companies stock?