Dell to acquire 3Par for $1.15bn

Dell, the third largest personal computer maker, said on Monday that it would acquire 3Par, a data storage company, in a $1.15bn deal that will sharpen its competition with companies incl-uding Hewlett-Packard, IBM and EMC.

The deal comes as Dell, which was burdened by its over-dependence on low-margin PC sales, made a long-awaited foray into the IT services business.

“They’re making a very hard push to redefine themselves,” said Charles King, principal analyst at Pund-IT Research.

3Par makes high-end storage systems and data management products that help companies cut their power and energy costs related to storing information.

Dell will add a premium storage product to its portfolio. And 3Par, which has well respected products but has failed to catch on among notoriously loyal IT purchasers, will benefit from Dell’s broad distribution network. “The deal makes a great deal of sense both from a technological and business point of view for both companies,” said Mr King. “With Dell’s distribution and deep pockets, 3Par ideally will be able to reach its full potential.”

Texas-based Dell will pay $18 a share in cash for 3Par, whose stock was trading at $9.65 a share last Friday. That represents a premium of almost 87 per cent.

Brad Anderson, senior vice-president of Dell’s enterprise product group, said that the purchase of 3Par, which was founded in 1999, followed the same rationale as its 2007 deal for mid-range storage supplier EqualLogic, giving existing Dell customers a choice of core storage components to choose from.

Founder and chief executive Michael Dell, who returned in 2007 after a three-year hiatus, is leading the push to broaden his company’s offerings.

One of his first moves upon returning was a 2007 deal for EqualLogic. When that $1.4bn deal was announced in 2007 it was Dell’s biggest acquisition.

Last year, Dell paid $3.9bn for services company Perot Systems. And since then, the company has taken in KACE Networks, Exanet and Ocarina Networks, three smaller storage and services companies.

“Since Mike Dell returned the company has really been refashioning itself by adding new products,” said Mr King. “And since he returned, the company has become much more comfortable with innovative acquisitions.”

The deal is expected to be complete by the end of the year and to add to Dell’s profits by 2012. Shares of 3Par surged 85.39 per cent to $17.89 in pre-market trading, while Dell’s stock price was flat at $12.01.