Hewlett-Packard on Thursday took another swipe at Dell’s deal to take over 3Par, raising its bid for the data storage company to $27 a share just hours after Dell had narrowly outbid its rival.
Earlier Dell had sneaked ahead of HP with a $24.30 a share cash offer, just above the $24 a share that HP said it would pay in an attempt to scupper Dell’s agreed deal.
Dell last week offered $18 a share for 3Par, which makes high-end storage systems and data management products used in “cloud computing”.
HP’s latest salvo values 3Par, which has yet to turn a profit, at $1.8bn, net of the company’s cash. 3Par shares were trading at $9.65 before Dell’s original $1.15bn agreement to buy the company. 3Par shares yesterday closed down 2.73 per cent at $26.03, before HP went public with its latest proposal.
“Not only is our offer superior to Dell’s proposal, HP remains uniquely positioned to execute on this combination given the number of synergies between the two companies,” said Dave Donatelli, executive vice-president of enterprise servers, storage and networking at HP.
HP, which is more than four times the size of Dell by market value, is thought by analysts and bankers to be able to outgun its rival in a bidding war.
But industry veterans questioned the prices both companies were willing to pay.
Pat Gelsinger, chief operating officer of products at EMC, called 3Par “an asset that is dramatically overvalued”.
“But it’s a seller’s market,” he added, noting that there were few storage companies left to buy.
HP would also have to pay a $72m break fee to Dell, worth about $1.15 a share, should it succeed in wresting 3Par from its rival. Dell and 3Par agreed to increase the break fee from $53.5m in their latest agreement.
Dell will have three days to respond to HP’s latest move, should 3Par’s board look favourably upon the $27 a share proposal.
“We’ll take some time, assess the situation and act in the best interests of our customers and shareholders,” Dell said.
Dell need only match or slightly exceed HP’s proposal, according to people familiar with the matter, who cautioned against counting Dell out.
The competition over 3Par underscores the importance of data storage and analysis as big businesses shift towards “cloud computing”, where information is housed remotely rather than on users’ computers.
Additional reporting by Alan Rappeport in New York and David Gelles in San Francisco