Bidding frenzy pushes price of 3Par to $2bn

By Joseph Menn

Published: August 27 2010 16:10 | Last updated: August 27 2010 16:10

Hewlett-Packard on Friday topped Dell’s offer for data-storage firm 3Par for the third time within a week, bidding $30 a share and valuing the company at $2bn in a bidding frenzy that analysts said might be aimed at getting its longtime computer rival to spend as much as possible.

Thelatest proposal came hours after the California-based 3Par had accepteda sweetened $27 offer from Dell, which was 3Par’s first choice and hadonly been required to match what HP put on the table. The initial dealstruck with Texas-based Dell had been for $18 a share, and even that wasan 87 per cent premium over 3Par’s stock market value.

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

While regarded as asuccessful innovator in the fast-growing market for sophisticated andenergy-efficient gear that stores businesses’ digital informationoutside traditional on-site computers, 3Par is losing money and reportedsales of just $54m in the latest quarter.

In announcing one ofits earlier bids, HP said there would be no short-term impact from theacquisition on its earnings. Both HP and Dell, though, want to build ontheir storage offerings as more of their customers move to a cloudarchitecture requiring access to remote data hoards.

Even at the lower prices for 3Par bandied about on Thursday, industry executives were puzzled.

Pat Gelsinger, chief operating officer of products at top stand-alone storage firm 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.

Asrecently as August 1, HP had declined to match Dell’s first bid of $18 ashare. But HP might not have known that Dell was its competition forthe prize and the company was distracted at the time because it wasnegotiating the exit of Mark Hurd, its chief executive.

HP,which is more than four times the size of Dell by market value, isthought by analysts and bankers to be able to outgun its rival in abidding war.

Additional reporting David Gelles in San Francisco and Alan Rappeport in New York