HP raises 3PAR offer to $27 per share, outbids Dell again

Hewlett-Packard has raised its offer for 3PAR to $27 per share, outbidding Dell once more in the battle to acquire the storage vendor.


Hewlett-Packard has raised its offer for 3PAR to $27 per share, outbidding Dell once more in the battle to acquire the storage vendor.

The offer came just hours after Dell raised its own bid to buy the company. Dell said Thursday morning that 3PAR had accepted its raised offer, but the terms allowed HP to slip in with another bid. It's now done just that, putting the ball back in Dell's court.

A spokesman for Dell said its agreement with 3PAR gives it the option to match HP's offer. "We'll take some time, assess the situation and act in the best interests of our customers and shareholders. We'll make a comment regarding our next step at an appropriate time," Dell spokesman David Frink said.

The bidding war has stunned financial analysts. The Financial Times Lex column this morning described HP’s offer as “almost impossible to rationalise,” while Richard Holway ventured that the offer was “completely insane”.

The veteran analyst who produces the TechMarketView newsletter said, “3Par is strategically important as data storage is a hot sector as the industry moves into the Cloud and to virtualisation. 3Par is about the only buyable company out there assuming that EMC is beyond reach. But surely there is a price limit for a $184m revenue company that has never made a profit?”

Dell offered to buy 3PAR at the start of last week for $18 per share, or about $1.15 billion net of 3PAR's cash. HP made a counterbid on Monday, offering $24.00 per share, or about $1.6 billion.

Dell topped that offer by $0.30 on Thursday morning, and HP wasted no time with its latest counterbid, which puts the price tag at $1.8 billion.

A 3PAR spokesman declined to comment on HP's latest offer.

HP acknowledged it is offering a high price for 3PAR, which reported a loss of $959,000 for its fiscal year ended March 31, on annual revenue of $185 million. HP's offer of $27 per share is almost three times what 3PAR's shares were trading at before the acquisition battle began.

But HP argued that it is "uniquely positioned" to execute on the transaction and that the deal provides value to its shareholders. "We have a strong business case and are confident this transaction makes strategic and financial sense," HP said.

3PAR was founded in 1999 and has about 650 employees. It says it has more than 6,000 clients including managed service providers Savvis, Verizon Business and Terremark; Internet companies MySpace.com, Tickets.com and Priceline.com; and enterprise customers such as Pier 1 Imports.

The company spent 25 percent of its revenue on research and development last year, according to its 2009 annual report, relatively high compared to other technology firms. The figure has been declining, however, from 29 percent in 2008 and 37 percent the year before that.

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