Dell loses 3Par bidding war to HP

Dell says it took 'a measured approach' through the bidding process, but has given up

Dell on Thursday said it would not increase its most recent proposal to acquire virtualized storage vendor 3Par, paving the path for rival Hewlett-Packard to acquire the company.

In an escalating bidding war, HP on Thursday raised its offer for 3Par to $US33 per share, or roughly $2.4 billion, from its previous bid of $30 per share. The move topped Dell's latest offer of $32 per share, according to 3Par.

HP's bid constituted a "superior offer," and Dell's final offer to acquire 3Par was not accepted by 3Par's board of directors, Dell said in a statement.

"We took a measured approach throughout the process and have decided to end these discussions," said Dave Johnson, Dell senior vice president of corporate strategy. Dell is entitled to receive a $US72 million break-up fee from 3Par upon the termination of its merger agreement.

Dell initially agreed to buy 3Par on Aug. 16 for $US1.15 billion, but HP on Aug. 23 submitted a bid to buy 3PAR for $1.6 billion. The bidding process for the company escalated, and on Thursday, the board of directors at 3Par considered HP's revised $33 per share bid as being a "superior proposal" to Dell's $32 per share proposal.

3Par declined comment. An HP spokesperson declined comment.

3Par makes scalable storage platforms with thin provisioning, under which allocation of storage depends on application needs. 3Par's technology differs from "fat provisioning," under which excess storage is allocated to an application to meet future needs.

In 3Par, HP will get a storage vendor that competes with high-end storage offerings from EMC, Hitachi Data Systems and IBM, said Charles King, principal analyst at Pund-IT.

HP already offers high-end storage products, but mostly through a relationship with Hitachi Data Systems. 3Par will give HP a workable alternative to those offerings, King said.

"I think the real thing that HP was looking for here was a greater deal of autonomy for its storage products," King said.

With 3Par, HP will gain a competitive product that it owns in the top-tier storage space, rather than relying on Hitachi partner technology or HP's aging EVA (Enterprise Virtual Array) technology, said Andrew Reichman, senior analyst at Forrester Research.

"They need to focus on retaining customers and key staff, and designing their storage portfolio for the next decade, determining where 3Par fits and how they will proceed in the market," Reichman said.

The high-end storage market can be lucrative as the margins are high, but the sales are mostly to enterprises with high-end computing environments and storage needs. HP is betting that its opportunities in cloud computing could increase through storage products that 3Par offers. HP has a sizeable data-center business and may have customers interested in 3Par's product, Pund-IT's King said.

The desire to acquire 3Par technology was obvious considering how competitive the market has become, but HP's win isn't necessarily Dell's loss, analysts said. Dell has a good relationship with EMC for high-end storage offerings and could continue to build that relationship. EMC offers Symmetrix enterprise storage arrays.

Dell could also evaluate other acquisition candidates, but that is no easy task given that there is no clearly proven option, Reichman said.

Companies such as Compellent or Xiotech are likely the best options at this point, but neither compete directly in the top-tier enterprise storage market today, Reichman said. Dell could also try to acquire EMC or NetApp, either of which could be a tremendously expensive and complicated deal. Or Dell could decide not to expand into the enterprise storage market, and to some extent lose credibility as an enterprise player, Reichman said.

"This is clearly what HP is hoping for by denying Dell 3Par," Reichman said.

Dell spokesman David Frink said that the company already offers a full range of low- to high-end storage products that address all markets. The company has also been adding intellectual property to improve its storage offerings. The company in July bought Ocarina, which makes hardware and software to reduce the amount of storage capacity enterprises need.

Dell will also continue to look at acquisitions in specific areas through which the company can improve its product offerings, Frink said.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags HPbusiness issuesDell3PAR

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Agam Shah

IDG News Service
Show Comments

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Jack Jeffries

MSI GS75

As the Maserati or BMW of laptops, it would fit perfectly in the hands of a professional needing firepower under the hood, sophistication and class on the surface, and gaming prowess (sports mode if you will) in between.

Taylor Carr

MSI PS63

The MSI PS63 is an amazing laptop and I would definitely consider buying one in the future.

Christopher Low

Brother RJ-4230B

This small mobile printer is exactly what I need for invoicing and other jobs such as sending fellow tradesman details or step-by-step instructions that I can easily print off from my phone or the Web.

Aysha Strobbe

Microsoft Office 365/HP Spectre x360

Microsoft Office continues to make a student’s life that little bit easier by offering reliable, easy to use, time-saving functionality, while continuing to develop new features that further enhance what is already a formidable collection of applications

Michael Hargreaves

Microsoft Office 365/Dell XPS 15 2-in-1

I’d recommend a Dell XPS 15 2-in-1 and the new Windows 10 to anyone who needs to get serious work done (before you kick back on your couch with your favourite Netflix show.)

Maryellen Rose George

Brother PT-P750W

It’s useful for office tasks as well as pragmatic labelling of equipment and storage – just don’t get too excited and label everything in sight!

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?