Mergers, Acquisitions, Alliances and Synergies Case Study

Case Title:

Dell's Acquisition of Alienware

Abstract:
On 22 March 2006, Dell Incorporation, the world's largest PC (personal computer) manufacturer, officially announced that it had acquired Alienware Corporation for an undisclosed sum. The US based private company, Alienware, was a branded leader in the high-end gaming PC segment in the US. Dell entered the gaming PC market in August 2005 with its XPS range of PCs. With the acquisition of the leader (Alienware), Dell expected to have a greater share of the gaming PC market. Dell would also gain knowledge in industrial designing and marketing of gaming PCs, which it could successfully implement for its own XPS range. On the other hand, the acquisition helped Alienware to venture into newer product lines and newer countries with Dell's financial backing. It would also gain out of Dell's strong logistic support system. Analysts were skeptical about the acquisition as Dell's previous acquisitions were not very successful. There was a chance of cannibalisation of Dell's XPS range by Alienware's gaming PCs. The case deals with the synergies and challenges of the acquisition of Alienware by Dell. It also provides a brief overview of the two companies.

Pedagogical Objectives:

• To discuss Dell’s strategy of entering into a newer market-the gaming PC market
• To discuss the possible synergies and challenges of the acquisition
• To discuss the global gaming PC market.

Keywords : Mergers,Acquisitions,Alliances Case Study;Dell; Alienware; Acquisition; XPS Range; Cannibalisation; Gaming PC (personal Computer); Nelson Gonzalez; Voodoo PC; Falcon Northwest; Organic growth; Product development; Supply chain; Michael Dell; Mark Vena; OEM (Original Equipment Manufacturer)