HP pushes price of 3Par up to $2bn

Hewlett-Packard on Friday topped Dell’s offer for data-storage company 3Par for the third time in a week, offering $30 a share in a bidding frenzy prompted by strategic ambitions that pushed the price well beyond ordinary valuations.

The latest offer valued 3Par, which is unprofitable, at $2bn and reflected what one adviser called HP’s “deeper pockets” and determination to keep its longtime rival from winning 3Par.

The bid equates to 95 times 3Par’s forecast earnings before interest, tax, depreciation and amortisation and about 8.5 times forecast sales.

The latest proposal came hours after California-based 3Par had accepted a sweetened offer of $27 from Dell, matching HP’s previous bid made on Thursday.

Dell is 3Par’s first choice and is only required to match what HP puts on the table. The initial deal struck with Texas-based Dell had been for $18 a share, and even that was an 87 per cent premium over 3Par’s stock market value.

The $2bn price for the data-storage company and the rapid-fire pace of the bidding stunned industry executives and appeared to give even Dell pause at last. The company had no immediate reaction on Friday to HP’s last bid as it weighed whether to match it yet again.

3Par shares closed up 24.7 per cent in New York to $32.46 as speculators bet that the battle would continue.

“Regardless of who ends up acquiring 3Par, we believe the winners are 3Par employees and shareholders as well as the bankers and lawyers involved,” said Shaw Wu, an analyst at Kaufman Bros.

While regarded as a successful innovator in the fast-growing market for sophisticated and energy-efficient gear that stores businesses’ digital information outside traditional on-site computers, 3Par is losing money and reported sales of just $54m in the latest quarter.

In announcing one of its earlier bids, HP has said there would be no short-term impact from an acquisition on its earnings.

Both HP and Dell want to build on their storage offerings as more of their customers move to a cloud architecture requiring access to remote data hoards.

HP is ahead of Dell as both race to become another IBM, offering services and a wide range of hardware and software that make it an effective “one-stop shop” for technology buyers overwhelmed by the process of assembling everything themselves.

Both hope to make storage a bigger part of their suites and might be nervous about Cisco Systems’ aspirations as well. That company has a joint venture with EMC, the leading, independent storage company.

“Dell and HP should have some paranoia about Cisco’s ability to take away some of their most coveted customers,” said Ashok Kumar, an analyst from Rodman & Renshaw.

“If customers are saying they like the idea of a stack solution – even one from the EMC and Cisco partnership – it puts a lot of pressure on them to do the same” he said.

As recently as August 1, HP had declined to match Dell’s first bid of $18 a share. HP was distracted at the time because it was negotiating the exit of Mark Hurd, its chief executive.