3Par, the storage company on the receiving end of rival takeover offers from Hewlett-Packard and Dell, turned up the heat in the bidding war on Tuesday as Dell scrambled to come up with a response that would keep it in contention.
In a filing late on Tuesday, 3Par said that as things stood, HP’s $1.6bn offer was “reasonably likely” to draw the support of its board. The formal declaration triggers a timetable that gives Dell a matter of days to raise the stakes still higher, or cede the battle to its larger rival.
Dell, which was taken by surprise by HP’s move, is assessing its options and is working on an improved offer, according to people familiar with the matter.
3Par shares on Tuesday rose 3.64 per cent to $27.04, above HP’s proposal, on expectations that Dell would return with an improved offer for the company. However, analysts on Tuesday questioned whether Dell could compete head to head with HP for 3Par.
HP is about four times the size of Dell, by market value, and has about $15bn in cash and cash equivalents on its balance sheet. Though it has $11bn on hand of its own, Dell is in the midst of an attempted turnaround and has less flexibility to mount a higher bid, according to analysts.
HP touched off the bidding war on Monday when it went public with an offer of $24 a share for the storage equipment maker, a third higher than Dell’s earlier agreed bid. Under the terms of the merger agreement, Dell will have three days to respond once the 3Par board determines that HP’s proposal is superior to their deal with Dell.
Additional reporting by Joseph Menn