Dell raises bid for 3Par in takeover battle with HP
Friday 27 August 2010
Dell has put the ball back in Hewlett-Packard's court in the computer manufacturing rivals' battle for control of 3Par, a California data storage company.
Investors were last night betting that Dell's improved $1.6bn (£1bn) offer for 3Par will not be the last word, and 3Par shares remained higher than the level of the latest bid in anticipation of a further move from HP.
Earlier yesterday, Dell upped its cash offer to $24.30 a share from the initial $18 at which 3Par's board agreed to sell last week. The board once again agreed to accept Dell's offer. HP had bid $24 on Monday.
But the stock is still trading above $26, more than double its level before the takeover battle broke out.
3Par sells servers and software for data centres. Both Dell and HP are looking beyond their traditional PC businesses for growth, to become IT hardware, software and services providers to large and small businesses, in competition with other tech titans, such as IBM and Cisco. Their interest in 3Par reflects the growing importance of so-called cloud computing, where data is stored not on personal computers but on third-party hardware housed in large data centres.
"Storage is at the forefront of this strategy," said Dave Johnson, senior vice-president of Dell corporate strategy. "With the 3Par acquisition, Dell with have the broadest set of differentiated storage solutions in the market today."
Dell's latest offer values loss-making 3Par at more than 8 times annual revenues. The company, founded by Michael Dell in 1999, has grown to 650 employees at offices across the world, including at its European development headquarters in Belfast.
HP has $115bn annual revenues compared to Dell's $53bn, putting it at an advantage if it really wishes to secure control of 3Par, said Ashok Kumar, at Rodman & Renshaw. "Even though Dell has the balance sheet to step up the offer, they're probably reaching the upper limits of what they can offer," he said. "At the end of the day, Hewlett-Packard is in a better position to close the deal."
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