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was not exclusive, Microsoft would continue to have other hardware partners, and Nokia would continue to make some
Symbian powered devices, at least until a WP7-based smartphone had proven to be a commercial success. Microsoft
also agreed to invest about 1 billion dollars in Nokia over a period of years to defray development and marketing costs.
The alliance enabled Nokia to adopt new software (WP7) with an established community of developers but that has sold
relatively poorly since its introduction in late 2010. With the phase out of its Symbian operating system over a period of
years, Nokia was able to substantially reduce its own research and development and marketing budgets.
Despite having been an early entrant into the smartphone business, Microsoft had been unable to gain significant
market share. Over the years, Microsoft has struck deals with many of the world’s best known cellphone manufacturers,
including Motorola and HTC Corp. But these alliances were hampered by either execution problems or by an inability
of Microsoft to prevent handset makers from shifting to other technologies such as Google’s Android operating system.
For example, after failing to deliver mobile phone technology that would compete with Apple and Google’s innovative
systems, Taiwanese handset manufacturer, HTC, lost interest in manufacturing smartphones based on what was then
known as Windows Mobile operating system and now makes many different Android phone models in addition to
devices powered by WP7. Even though Microsoft’s Mobility software was substantially revamped and dubbed
Windows Phone 7, it was only able to capture 2% market share in the fourth quarter of 2010 following its introduction
early in the fall of that year.
Despite all the fanfare surrounding the formation of the partnership, investors expressed their disapproval of the deal
with Nokia’s stock falling 11% on the announcement. Similarly, Microsoft’s shares fell by 1% as investors feared that
the firm had teamed with a weak player in the smartphone market and that the 2-year transition period before WP7-
based smartphones would be sold in volume would only allow Android-based smartphones and iPhones to get further
ahead.
Its potential notwithstanding, the partnership faced many challenges. Despite setting the industry standard for
handsets, Nokia did not have a smartphone product comparable to Apple’s iPhone (introduced in 2007) and Google’s
Android system (first shipped in 2009). With Samsung, HTC, and LG having invested heavily in Android-powered
devices, they had little incentive to commit to WP7-based devices. Instead, these firms seemed to be inclined to use the
WP7 system as an alternative to Android in its negotiations with Google threatening to shift resources to WP7.
Furthermore, Nokia is a European company and Europe is where it has greatest market share. However, Microsoft has
had a checkered past with EU antitrust authorities which sued the firm for alleged monopolies in its Windows and
Office products. European companies have been much faster to adopt open-source solutions, often in an effort to replace
Microsoft software. With the announcement of the alliance, there was the danger that Nokia would see a portion of its
customers move into Android-based devices and into iPhones.
2012 undercutting Nokia plans to develop and market own tablet devices. Moreover, sharing of intellectual property
held by the two companies was not nearly as seamless as had been hoped at the inception of the partnership.
Development activities at the two firms overlapped as both Microsoft and Nokia were spending money on app
developers, music stores, and other content required for the ecosystem (i.e., products and content using a common
operating system). It soon became apparent that both partners would be better off operating as a single entity owned by
one party.
In an audacious move, Microsoft announced that it had reached an agreement to acquire Nokia in September 2013.
Nokia shareholders approved the $7.4 billion sale of the firm’s mobile handset business to Microsoft before the end of
the year, eventually closing the deal following receipt of regulatory approval in early 2014. Under the terms of the
transaction, Microsoft paid $5.2 billion to buy Nokia’s devices and services business plus an additional $2.2 billion to
license Nokia’s patents and the Nokia name for 10 years. Because Nokia is based in Finland, Microsoft can use a
portion of its foreign held cash to pay for the acquisition, enabling it to avoid a hefty tax burden if such funds were
repatriated to the United States. Microsoft undertook a similar strategy when it acquired Skype for $8.2 billion, the
largest acquisition in its history.
The acquisition firmly committed Microsoft to a vertical business strategy in which it would own both the hardware
and software products. The “Microsoft strategy” is patterned after the Apple model built around iPads, iPhones and the
firm’s App Store and Google’s model built on the Android operating system, Google Plus market place, and Nexus line
of tablets. The acquisition also had the added benefit of preventing a Microsoft competitor from acquiring Nokia.
After selling its phone business, Nokia is a shadow of its former self. Its remaining businesses include network
infrastructure and services; mapping and location services, and a technology development and licensing unit. Microsoft
faces an uphill struggle in its effort to transform the firm into a major global mobile technology player. Windows
phones accounted for only 3.7% of smartphone shipments in 2013. The Surface tablet, while showing some
improvement in sales in early 2014, still lagged far behind industry leader Apple. Nokia has fallen to second place in
terms of shipments of mobile phones behind Samsung and is not even in the top five makers of smartphones.
Furthermore, integrating with minimal disruption the two disparate Microsoft and Nokia corporate cultures is a daunting
task. The takeover of Nokia may prove to be just another battle in the ongoing global smartphone wars.
Discussion Questions
1. Using the motives for mergers and acquisitions described in Chapter 1, which do you think apply to Microsoft’s
acquisition of Nokia? Discuss the logic underlying each motive you identify. Be specific.
2. Speculate as to why Microsoft and Nokia initially decided to form a partnership rather than have Microsoft simply
acquire Nokia? Why was the partnership unsuccessful?
3. Speculate as to why Microsoft used cash rather than some other form of payment to acquire Nokia?
4. The Nokia takeover is an example of vertical integration. How does vertical integration differ from horizontal
integration? How are the two businesses (software and hardware) the same and how are they different? What are
the potential advantages and disadvantages of this vertical integration for Microsoft? Be specific.
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5. What are the critical assumptions that Microsoft is making in buying Nokia? Do you believe these assumptions are
realistic? Explain your answer.
Google Acquires Motorola Mobility in a Growth-Oriented as well as Defensive Move
Key Points
The acquisition of Motorola Mobility positions Google as a vertically integrated competitor in the fast-growing
wireless devices market.
The acquisition also reduces their exposure to intellectual property litigation.
______________________________________________________________________________
By most measures, Google’s financial performance has been breathtaking. The Silicon Valley–based firm’s revenue
in 2011 totaled $37.9 billion, up 29% from the prior year, reflecting the ongoing shift from offline to online advertising.
While the firm’s profit growth has slowed in recent years, the firm’s 26% net margin remains impressive. About 95% of
the firm’s 2011 revenue came from advertising sold through its websites and those of its members and partners.2 Google
is channeling more resources into “feeder technologies” to penetrate newer and faster-growing digital markets and to
increase the use of Google’s own and its members’ websites. These technologies include the Android operating system,
designed to power wireless devices, and the Chrome operating system, intended to attract Windows- and Mac-based
computer users.
Faced with a need to fuel growth to sustain its market value, Google’s announcement on August 15, 2011, that it
would acquire Motorola Mobility Holdings Inc. (Motorola) underscores the importance it places on the explosive
growth in wireless devices. The all-cash $12.5 billion purchase price represented a 63% premium to Motorola’s closing
price on the previous trading day. Chicago-based, Motorola makes cellphones, smartphones, tablets, and set-top boxes;
its status as one of the earliest firms to develop cellphones and one of the leading mobile firms for the past few decades
meant that it had accumulated approximately 17,000 patents, with another 7,500 pending. With less than 3% market
share, the firm had been struggling to increase handset shipments and was embroiled in multiple patent-related lawsuits
with Microsoft.
As Google’s largest-ever deal, the acquisition may be intended to transform Google into a fully integrated mobile
phone company, to insulate itself and its handset-manufacturing partners from patent infringement lawsuits, and to gain
clout with wireless carriers, which control cellphone pricing and distribution. Revenue growth could come from license
fees paid on the Motorola patent portfolio and sales of its handsets and by increasing the use of its own websites and
those of its members to generate additional advertising revenue.
2 Google views its members (customers) as the over 1 million businesses that post advertisements on its websites;
partners consist of website publishers on whose sites Google posts advertisements and with whom Google shares
revenue from those advertisements. At 69% of total Google revenue, advertising revenue from Google websites grew at
34% in 2011, while advertising revenue from its members contributed 27% of total and grew by 18%.
Google was under pressure from its handset partners, including HTC and Samsung, to protect them from patent
infringement suits based on their use of Google’s Android software.3 Microsoft has already persuaded HTC to pay a fee
for every Android phone manufactured, and it is seeking to extract similar royalties from Samsung. If this continues,
such payments could make creating new devices for Android prohibitively expensive for manufacturers, forcing them to
turn to alternative platforms like Windows Phone 7. With a limited patent portfolio, Google also was vulnerable to
lawsuits against its Android licenses.
Risks associated with the deal include the potential to drive Android partners such as Samsung and HTC to consider
using Microsoft’s smartphone operating system, with Google losing license fees currently paid to use the Android
operating system. The deal offers few cost savings opportunities due the lack of overlap between Google, an Internet
search engine that also produces Android phone software, and handset manufacturer Motorola. Google is essentially
becoming a vertically integrated cellphone maker. Furthermore, when the deal was announced, some regulators
expressed concern about Google’s growing influence in its served markets. Finally, Google’s and Motorola’s growth
and profitability differ significantly, with Motorola’s revenue growth rate less than one–third of Google’s and its
operating profit margin near zero.
Samsung, HTC, Sony Ericsson, and LG are now both partners and competitors of Google. It is difficult for a firm
such as Google to both license its products (Android operating system software) and compete with those licensees by
selling Motorola handsets at the same time. Nokia has already aligned with Microsoft and abandoned its own mobile
operating system. Others may try to create their own operating systems rather than become dependent on Google.
Samsung released phones in 2011 that run on a system called Bada; HTC has a team of engineers dedicated to
customizing the version of Android that it uses on its phones, called HTC Sense.
Motorola Mobility’s shares soared by almost 57% on the day of the announcement. Led by Nokia, shares of other
phone makers also surged. In contrast, Google’s share price fell by 1.2%, despite an almost 2% rise in the S&P 500
stock index that same day.
Discussion Questions:
1. Many acquisitions are intended to create measureable synergy between the acquirer and target firms. In what
sense is Motorola Mobility’s role in this transaction unclear? Identify sources of synergy between Google and
Motorola Mobility. What factors are likely to make the realization of this synergy difficult? Be specific.
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2. Using the motives for mergers and acquisitions described in Chapter 1, which do you thing apply to Google’s
acquisition of Motorola Mobility? Be specific.
3. Speculate as to why the share price of Motorola Mobility did not increase by the full extent of the premium and
why Google’s share price fell on the day of the announcement. Be specific.
4. Speculate as to why the shares of other handset manufacturers jumped on the announcement that Google was
buying Motorola Mobility. Be specific.
5. How might the growing tendency for technology companies to buy other firms’ patents affect innovation? Be
specific.
Lam Research Buys Novellus Systems to Consolidate Industry
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Key Points
Industry consolidation is a common response to sharply escalating costs, waning demand, and increasing demands
of new technologies.
Customer consolidation often drives consolidation among suppliers.
______________________________________________________________________________________________
Highly complex electronic devices such as smartphones and digital cameras have become ubiquitous in our everyday
lives. These devices are powered by sets of instructions encoded on wafers of silicon called semiconductor chips
(semiconductors). Consumer and business demands for increasingly sophisticated functionality for smartphones and
cloud computing technologies require the ongoing improvement of both the speed and the capability of semiconductors.
This in turn places huge demands on the makers of equipment used in the chip-manufacturing process.
To stay competitive, makers of equipment used to manufacture semiconductor chips were compelled to increase
R&D spending sharply. Chip manufacturers resisted paying higher prices for equipment because their customers, such
as PC and cellphone handset makers, were facing declining selling prices for their products. Chip equipment
manufacturers were unable to recover the higher R&D spending through increasing selling prices. The resulting erosion
in profitability due to increasing R&D spending was compounded by the onset of the 2008–2009 global recession.
The industry responded with increased consolidation in an attempt to cut costs, firm product pricing, and gain access
to new technologies. Industry consolidation began among chip manufacturers and later spurred suppliers to combine. In
February 2011, chipmaker Texas Instruments bought competitor National Semiconductor for $6.5 billion. Three months
later, Applied Materials, the largest semiconductor chip equipment manufacturer, bought Varian Semiconductor
Equipment Associates for $4.9 billion to gain access to new technology. On December 21, 2011, Lam Research
Corporation (Lam) agreed to buy rival Novellus Systems Inc. (Novellus) for $3.3 billion. Lam anticipates annual cost
savings of $100 million by the end of 2013 due to the elimination of overlapping overhead.
Under the terms of the deal, Lam agreed to acquire Novellus in a share exchange in which Novellus shareholders
would receive 1.125 shares of Lam common stock for each Novellus share. The deal represented a 28% premium over
the closing price of Novellus’s shares on the day prior to the deal’s public announcement. At closing, Lam shareholders
owned about 51% of the combined firms, with Novellus shareholders controlling the rest.
In comparison to earlier industry buyouts, the purchase seemed like a good deal for Lam’s shareholders. At 2.3 times
Novellus’s annual revenue, the purchase price was almost one-half the 4.5 multiple paid by industry leader Applied
Materials for Variant in May 2011. The purchase premium paid by Lam was one-half of that paid for comparable
transactions between 2006 and 2010. Yet Lam shares closed down 4%, and Novellus’ shares closed up 28% on the
announcement date.
Lam and Novellus produce equipment that works at different stages of the semiconductor-manufacturing process,
making their products complementary. After the merger, Lam’s product line would be considerably broader, covering
more of the semiconductor-manufacturing process. Semiconductor-chip manufacturers are inclined to buy equipment
from the same supplier due to the likelihood that the equipment will be compatible. Lam also is seeking access to
cutting-edge technology and improved efficiency. Technology exchange between the two firms is expected to help the
combined firms to develop the equipment necessary to support the next generation of advanced semiconductors.
Customers of the two firms include such chip makers as Intel and Samsung. By selling complementary products, the
firms have significant cross-selling opportunities as equipment suppliers to all 10 chip makers globally. Together, Lam
and Novellus are able to gain revenue faster than they could individually by packaging their equipment and by
developing their technologies in combination to ensure they work together. Lam has greater penetration with Samsung
and Novellus with Intel.
Lam also stated on the transaction announcement date that a $1.6 billion share repurchase program would be
implemented within 12 months following closing. The buyback allows shareholders to sell some of their shares for cash
such that, following completion of the buyback, the deal could resemble a half–stock, half-cash deal, depending on how
many shareholders tender their shares during the buyback program. The share repurchase will be funded out of the
firms’ combined cash balances and cash flow. Structuring the deal as an all-stock purchase at closing allows Novellus
shareholders to have a tax-free deal.4
Discussion Questions:
1. Why did Lam’s shares close down 4 percent on the news? Why did Novellus’ shares close up 28 percent?
2. Speculate why Lam used stock rather than some other form of payment?
3. Describe how market pressures on semiconductor manufacturers’ impact chip equipment manufacturers and
how this merger will help Lam and Novellus better serve their customers in the future.
4. How do the high fixed costs in the highly cyclical chip equipment manufacturing industry encourage
consolidation?
5. Is this deal a merger or a consolidation from a legal standpoint?
6. Is this deal a horizontal or vertical transaction? What is the significance of this distinction?
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7. What are the motives for the deal? Discuss the logic underlying each motive you identify.
8. How are Lam and Novellus similar and how are they different? In what way will their similarities and
differences help or hurt the long-term success of the merger?
9. Speculate as to why Lam announced a $1.6 billion share repurchase program at the same time it announced the
deal.
10. Do you believe this deal would help or hurt competition among semiconductor chip equipment manufacturers?
V.F. Corp Buys Timberland
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Key Points
Acquisitions often are used to change a firm’s product focus rapidly.
Acquisitions of direct competitors often represent significant revenue growth and cost–saving opportunities.
The timely realization of synergies is critical to recovering purchase price premiums.
Widely recognized in the United States and Europe as a maker of rugged outdoor apparel, Timberland (TBL) had
stumbled in recent years. Its failure to turn around its money-losing Yellow Boot brand, the limited success of its
advertising campaign to encourage consumers to think of Timberland apparel as a year-round brand, and overly
ambitious expansion plans in China caused earnings to deteriorate. Despite annual revenues growing to more than $1.6
billion in fiscal year 2011, the firm was losing market share to such competitors as the Gap and Sears Holdings.
30
Timberland’s share price declined as investor confidence in management waned when the firm failed to meet its
quarterly earnings forecasts. Timberland was ripe for takeover.
With annual revenue of $7.7 billion, apparel maker V.F. Corporation (VFC), owner of such well-known brands
as The North Face, Wrangler, and Lee, was always on the prowl for firms that fit its business strategy. VFC has grown
historically by adding highly recognizable brands with significant market share. The strategy has been implemented
largely through acquisition rather than through partnering with others or developing its own brands. Furthermore, the
firm was shifting its product offering toward the rapidly growing outdoor-apparel business.
With its focus on outdoor apparel, Timberland became a highly attractive target, especially as its share price
declined. VFC pounced on the opportunity to add the highly recognizable Timberland trademark to its product portfolio.
On June 13, 2011, VFC announced that it had reached an agreement to pay TBL shareholders $43 per share in an all–
cash deal, a 43% premium over the prior day’s closing price. The deal valued TBL at about $2 billion.
Including the Timberland acquisition, VFC’s outdoor and action sports product lines were expected to
contribute about one-half of the firm’s total annual revenue in 2012, ultimately rising by more than 60% by 2015. In
buying Timberland, VFC gained access to new retail outlets and the opportunity to better position TBL as a lifestyle
brand in the apparel and accessories market. VFC also hoped to use TBL’s rapidly growing online business to help it
achieve its online sales goal of more than $400 million by 2015, more than three times their 2011 total. VFC hoped to
accelerate the growth in TBL product sales by expanding their availability through its own e-commerce site and through
its international operations. Likewise, VFC expected to achieve substantially larger discounts on raw material purchases
than TBL because of its larger bulk purchases and to reduce overhead expenses by eliminating redundant positions.
Xerox Buys ACS to Satisfy Shifting Customer Requirements
In anticipation of a shift from hardware and software spending to technical services by their corporate customers, IBM
announced an aggressive move away from its traditional hardware business and into services in the mid-1990s. Having
sold its commodity personal computer business to Chinese manufacturer Lenovo in mid-2005, IBM became widely
recognized as a largely “hardware neutral” systems integration, technical services, and outsourcing company.
Because information technology (IT) services have tended to be less cyclical than hardware and software sales, the
move into services by IBM enabled the firm to tap a steady stream of revenue at a time when customers were keeping
computers and peripheral equipment longer to save money. The 2008–2009 recession exacerbated this trend as
corporations spent a smaller percentage of their IT budgets on hardware and software.
These developments were not lost on other IT companies. Hewlett-Packard (HP) bought tech services company EDS
in 2008 for $13.9 billion. On September 21, 2009, Dell announced its intention to purchase another IT services
company, Perot Systems, for $3.9 billion. One week later, Xerox, traditionally an office equipment manufacturer
announced a cash and stock bid for Affiliated Computer Systems (ACS) totaling $6.4 billion.
Each firm was moving to position itself as a total solution provider for its customers, achieving differentiation from
its competitors by offering a broader range of both hardware and business services. While each firm focused on a
somewhat different set of markets, they all shared an increasing focus on the government and healthcare segments.
However, by retaining a large proprietary hardware business, each firm faced challenges in convincing customers that
they could provide objectively enterprise-wide solutions that reflected the best option for their customers.
Previous Xerox efforts to move beyond selling printers, copiers, and supplies and into services achieved limited
success due largely to poor management execution. While some progress in shifting away from the firm’s dependence
on printers and copier sales was evident, the pace was far too slow. Xerox was looking for a way to accelerate
transitioning from a product-driven company to one whose revenues were more dependent on the delivery of business
services.
With annual sales of about $6.5 billion, ACS handles paper-based tasks such as billing and claims processing for
governments and private companies. With about one–fourth of ACS’s revenue derived from the healthcare and
government sectors through long-term contracts, the acquisition gives Xerox a greater penetration into markets which
should benefit from the 2009 government stimulus spending and 2010 healthcare legislation. More than two-thirds of
ACS’s revenue comes from the operation of client back office operations such as accounting, human resources, claims
management, and other business management outsourcing services, with the rest coming from providing technology
consulting services. ACS would also triple Xerox’s service revenues to $10 billion.
Xerox hopes to increases its overall revenue by bundling its document management services with ACS’s client back
office operations. Only 20 percent of the two firms’ customers overlap. This allows for significant cross-selling of each
firm’s products and services to the other firm’s customers. Xerox is also betting that it can apply its globally recognized
brand and worldwide sales presence to expand ACS internationally.
A perceived lack of synergies between the two firms, Xerox’s rising debt levels, and the firm’s struggling printer
business fueled concerns about the long–term viability of the merger, sending Xerox’s share price tumbling by almost
10 percent on the news of the transaction. With about $1 billion in cash at closing in early 2010, Xerox needed to
borrow about $3 billion. Standard & Poor’s credit rating agency downgraded Xerox’s credit rating to triple-B-minus,
one notch above junk.
Integration is Xerox’s major challenge. The two firms’ revenue mixes are very different, as are their customer bases,
with government customers often requiring substantially greater effort to close sales than Xerox’s traditional
commercial customers. Xerox intends to operate ACS as a standalone business, which will postpone the integration of
its operations consisting of 54,000 employees with ACS’s 74,000. If Xerox intends to realize significant incremental
revenues by selling ACS services to current Xerox customers, some degree of integration of the sales and marketing
organizations would seem to be necessary.
It is hardly a foregone conclusion that customers will buy ACS services simply because ACS sales representatives
gain access to current Xerox customers. Presumably, additional incentives are needed, such as some packaging of Xerox
hardware with ACS’s IT services. However, this may require significant price discounting at a time when printer and
copier profit margins already are under substantial pressure.
Customers are likely to continue, at least in the near term, to view Xerox, Dell, and HP more as product than service
companies. The sale of services will require significant spending to rebrand these companies so that they will be
increasingly viewed as service vendors. The continued dependence of all three firms on the sale of hardware may retard
their ability to sell packages of hardware and IT services to customers. With hardware prices under continued pressure,
customers may be more inclined to continue to buy hardware and IT services from separate vendors to pit one vendor
against another. Moreover, with all three firms targeting the healthcare and government markets, pressure on profit
margins could increase for all three firms. The success of IBM’s services strategy could suggest that pure IT service
companies are likely to perform better in the long run than those that continue to have a significant presence in both the
production and sale of hardware as well as IT services.
Discussion Questions:
1. Discuss the advantages and disadvantages of Xerox’s intention to operate ACS as a standalone business.
As an investment banker supporting Xerox, would you have argued in support of integrating ACS
immediately, at a later date, or to keep the two businesses separate indefinitely? Explain your answer.
32
2. How are Xerox and ACS similar and how are they different? In what way will their similarities and
differences help or hurt the long-term success of the merger?
3. Based on your answers to questions 1 and 2, do you believe that investors reacted correctly or incorrectly
to the announcement of the transaction?
Dell Moves into Information Technology Services
Dell Computer’s growing dependence on the sale of personal computers and peripherals left it vulnerable to economic
downturns. Profits had dropped more than 22 percent since the start of the global recession in early 2008 as business
spending on information technology was cut sharply. Dell dropped from number 1 to number 3 in terms of market
share, as measured by personal computer unit sales, behind lower-cost rivals Hewlett-Packard and Acer. Major
competitors such as IBM and Hewlett-Packard were less vulnerable to economic downturns because they derived a
larger percentage of their sales from delivering services.
Historically, Dell has grown “organically” by reinvesting in its own operations and through partnerships targeting
specific products or market segments. However, in recent years, Dell attempted to “supercharge” its lagging growth
through targeted acquisitions of new technologies. Since 2007, Dell has made ten comparatively small acquisitions
(eight in the United States), purchased stakes in four firms, and divested two companies. The largest previous
acquisition for Dell was the purchase of EqualLogic for $1.4 billion in 2007.
The recession underscored what Dell had known for some time. The firm had long considered diversifying its
revenue base from the more cyclical PC and peripherals business into the more stable and less commodity-like
computer services business. In 2007, Dell was in discussions about a merger with Perot Systems, a leading provider of
information technology (IT) services, but an agreement could not be reached.
Dell’s global commercial customer base spans large corporations, government agencies, healthcare providers,
educational institutions, and small and medium firms. The firm’s current capabilities include expertise in infrastructure
consulting and software services, providing network–based services, and data storage hardware; nevertheless, it was still
largely a manufacturer of PCs and peripheral products. In contrast, Perot Systems offers applications development,
systems integration, and strategic consulting services through its operations in the United States and ten other countries.
In addition, it provides a variety of business process outsourcing services, including claims processing and call center
operations. Perot’s primary markets are healthcare, government, and other commercial segments. About one-half of
Perot’s revenue comes from the healthcare market, which is expected to benefit from the $30 billion the U.S.
government has committed to spending on information technology (IT) upgrades over the next five years.
In 2008, Hewlett-Packard (HP) paid $13.9 billion for computer services behemoth, EDS, in an attempt to become a
“total IT solutions” provider for its customers. This event, coupled with a very attractive offer price, revived merger
discussions with Perot Systems. On September 21, 2009, Dell announced that an agreement had been reached to acquire
Perot Systems in an all-cash offer for $30 a share in a deal valued at $3.9 billion. The tender offer (i.e., takeover bid) for