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Dell bids high for 3PAR, gets a 'yes'

Knocks HP back

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3PAR has said 'yes' to Dell after the PC firm raised its bid for the storage vendor to $24.30/share beating HP's rival bid by just 30 cents.

Dell first bid $18/share and this was accepted by 3PAR on 16 August. HP then re-entered the fray with a $24/share bid, having previously negotiated but dropped out some two weeks before the Dell bid was agreed.

Yesterday 3PAR said that the HP bid seemed tastier and gave Dell three days to come back with a better offer once it had definitely decided that HP's bid was a superior one.

Dell has not waited, coming right back with this revised offer worth $1.6bn, which 3PAR has promptly accepted.

HP had said its global channel would accelerate 3PAR's growth. Dell today said: "Dell believes that its global brand and broad global customer reach will dramatically accelerate 3PAR’s revenue growth." It cites what it has achieved with EqualLogic as proof.

Both the Dell and HP bids are transitioning to the phase where shareholders have to accept an offer. Dell's statement says: "Unless extended, the tender offer and any withdrawal rights to which 3PAR stockholders may be entitled will expire at midnight, EDT, on Sept. 20, 2010."

It seems clear that 3PAR wants to become a wholly-owned subsidiary of Dell rather than be integrated into HP's business. Now both Dell and HP have to appeal to 3PAR's shareholders and persuade them to back one of their respective offers. HP is doing this at the moment without public support from 3PAR's executive management and board.

Other things being equal shareholders will choose the highest value bid, and that's Dell's, for now. The 30 cents a share premium over HP's offer is not a knock-out blow, financially speaking. It seems more like a probing shot to find out what HP is willing to bring to the table.

We can go further than this and say that HP will have anticipated a Dell counter-offer and will respond quite quickly. The meat of the contest between HP and Dell is not so much about which company has the deeper pockets - that's HP - but which company is willing to pay most for the 3PAR prize.

By the way, we said this bid was likely back in November last year. ®

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