Posted on Wednesday, 1st September 2010 by Jesse Walker
(Updates with additional details on H-P’s deal to buy 3Par and with more background.)
NEW YORK -(Dow Jones)- Hewlett-Packard Co. (HPQ) won the battle for 3Par Inc. (PAR) after increasing its offer for the maker of data storage products to $2.1 billion, prompting rival Dell Inc. (DELL) to withdraw from the nearly two-week bidding war.
3Par, an emerging player in the growing business of cloud computing, accepted H-P’s offer of $33 a share. 3Par called the proposal “superior” to Dell’s latest bid, which included raising its per-share offer to $32, boosting the break-up fee and proposing a multiyear reseller agreement.
Dell said that it won’t increase its latest bid and that it has ended its acquisition discussions with 3Par. The company said it is entitled to a $72 million break-up fee from 3Par upon termination of the merger pact.
3Par shares–which were trading over $33, indicating investors believed the bidding war wasn’t done–have since receded to $32.82, up 2.3% on the day, after Dell bowed out.
Dell shares, meanwhile, rose 1.6% to $12.31 Thursday, and H-P increased 11 cents to $39.32.
The end to the bidding war between the two technology giants comes more than two weeks after Dell initially announced its agreement to buy 3Par for about $1.2 billion in cash, or $18 a share. On Aug. 23, H-P publicly announced its offer of $24 a share, which it proceeded to raise twice last week in two three-dollar increments.
Dell’s retreat comes as it tilts with H-P for footing in the lucrative market for high-end data storage needed in cloud computing, the increasingly popular technique of accessing corporate databases remotely via the Internet. 3Par would have helped Dell in that goal, providing high-end storage technology that can rapidly send and receive data.
Dell and H-P are both looking for new areas of growth beyond typically low-margin personal computer sales, which brought them to 3Par. They have also both entered the high-margin services market and are ratcheting up competition with International Business Machines Corp. (IBM), which also offers products that compete with 3Par’s storage systems.
In particular, Dell has further sought specialty in data storage, buying both Ocarina Networks and Scalent Systems this year. H-P, by contrast, has extended its reach into the consumer market–an area in which Dell remains weak–through its purchase of handheld computing pioneer Palm Inc.
Analysts have said Dell would have benefited from acquiring 3Par’s technology, which could help it grab the attention of new corporate customers it doesn’t already have, such as institutional banks.
(Ian Sherr and Tess Stynes contributed to this report.)
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