Add to del.icio.us     Digg this

Aug. 23, 2010

Hewlett-Packard has pulled the rug off Dell's feet by offering to acquire 3Par Inc. for about $1.6 billion, topping Dell’s bid last week for the maker of hardware equipment and software products for today's modern data centers. HP's bid of $24 a share in cash is a little over 32.9 percent higher than Dell’s offer last week, HP said this morning.

So far, Dell offered only $18 a share in cash, or about $1.15 billion, for 3Par last Monday.

Both HP and Dell are competing for a smaller rival to challenge giant IT solutions provider IBM in the market for more complex server systems and IT services that yield higher profits than desktop and laptop PCs.

Based in Fremont, California, 3Par makes hardware and software for cutting down on data and information-storage requirements. Its stock soared past HP’s offer price, signaling some investors expect a bidding contest of some sorts.

Others aren't convinced that Dell will sweeten its offer and will probably let HP take hold of 3Par.

3Par climbed $7.22, or 40 percent, to $25.26 in New York Stock Exchange composite trading this morning. The company closed at $9.65 the last trading day before Dell’s offer. Palo Alto, California-based HP fell 7 cents to $39.87.

For its part, Dell rose 7 cents to $12.14 on the Nasdaq Stock Market.

“One of the main growth areas in technology today is in the enterprise storage space,” said Joel Levington, managing director of corporate credit at Brookfield Investment Management in New York.

“3Par’s enterprise products and services fit well in here. It’s an easy way to gain product breadth,” Levington added.

HP’s acquisition bid now values unprofitable 3Par at almost 2 1/2 times what it was trading at before Dell’s offer, and at more than eight times its sales of $194.3 million in the year ended March 31.

3Par’s sales rose 5.2 percent from last year, and it had about 668 employees as of June 30.

“It’s a very expensive price,” Levington added.

He said Dell may not have the financial resources to top the bid at this point in time. Both Dell and HP have already expanded their data-center offerings through a few acquisitions of their own.

HP acquired Marlborough, Mass.-based 3Com Corp., a networking-gear maker, for $2.7 billion in March.

Dell acquired EqualLogic Inc. in 2007 for $1.4 billion, as the foundation for its data-storage offering. In July, Dell agreed to also acquire closely held storage company Ocarina Networks and server-computer maker Scalent Systems Inc.

Other similar IT firms are also racing to broaden their enterprise technology businesses through acquisitions.

Oracle Corp., the world’s second-biggest software maker, acquired Sun Microsystems for about $7.3 billion to expand into high-end server hardware.

3Par was co-founded in 1999 by Chief Technology Officers Jeff Price and Ashok Singhal, who had previously worked at Sun Microsystems.

CEO David Scott, who previously worked at HP, has held his position since 2001. Another 3Par co-founder is Robert Rogers.

Overall, HP's acquisition bid for 3Par is actually its second bid for the company, said Dave Donatelli, who heads HP’s server and storage division. The company has been in talks with 3Par for “some period of time,” he said, declining to comment any further.

David Graves, a Dell spokesman, didn’t immediately respond to requests for comments. And John D’Avoli, a spokesman for 3Par, didn’t immediately comment either.

The deal, which would close later this year, is at least the third acquisition for HP worth more than $1 billion in less than a year.

Hewlett Packard agreed to buy 3Com in March, and in April it agreed to pay $1.2 billion for smartphone maker Palm Inc.

Source: Hewlett-Packard.

Add to del.icio.us     Digg this