Is Dell Preparing to Counter HP's Bid for 3Par?

4 minute read
David Roe avatar

The battle to secure storage software provider 3Par (news, site) has a way to run yet. There are now rumors circulating that Dell (news, site) is getting ready to come back with a sweetner to the US$ 1.6 billion that HP offered for the same company yesterday,.

The Battle for Data Storage Technology

If you missed it earlier, this is about US $350 million more than the US$ 1.15 billion Dell offered for 3Par just over a week ago.

However, reports circulating in the Bloomberg financial news agency and based on reports from “a person familiar with the matter” suggest that Dell is bracing itself to make a counter offer that could come within a matter of days.

In the event that Dell does make an offer it would not be entirely surprising if HP (news, site) came back again. After all, HP says 3Par’s data storage technology portfolio is a perfect fit for it and corresponds exactly with its plans for the cloud.

Financial analysts are also expecting further moves from HP citing the fact that US$ 1.6 billion is relatively cheap for a company with a market value in excess of US$ 90 billion and has US$ 15 billion in cash, especially given that HP is citing the success of the computer network infrastructure products 3Com after it acquired it as an example of its prescience in deal making.

However, there is more to this than just money, and both companies appear to be putting pride first.

At this point, the amount of premium these guys are paying is insane . . . It’s not about valuation at this point . . . HP is going to win . . . Dell just doesn’t have that ammunition. HP has the balance sheet to buy anything,”Kaushik Roy, an analyst at Wedbush Securities in San Francisco is cited by Bloomberg as saying.

While HP says its board has already approved their bid, there is no indication from 3Par that their directors are going to do likewise, and with counter-bid rumours doing the rounds it seems unlikely that 3Par will do little more than sit on its hands and play ‘hard to get’.

If IBM and EMC have been quiet in relation to this, it’s no real surprise in that both have high-end storage products that they both seem happy with.

Why Dell Wants 3Par

Dell wants 3Par because it hopes to become a major player in the cloud, while at the same time addressing critics who say it has fallen behind rivals IBM, Oracle and EMC in the software services market.

3Par is the last obvious product needed by Dell to provide a full storage portfolio. It now covers the SMB market with its own products, the middle sized enterprise market with EqualLogic, and hopes to cover the upper and data intensive end with 3Par.

Learning Opportunities

Dell and Acquisitions

Dell has been sniffing around the data storage space since at least 2007 when it bought storage company Equallogic for US$ 1.4 billion.

Last year, it also bought Perot Systems for US$ 3.9 billion which provides information technology services and was in the top five of Fortune magazine’s “Most Admired Companies in America” list for IT Services in 2008.

Last year it also lured David Johnson, an M&A heavyweight, away from Big Blue while at the same time announcing that it was on the acquisition trail.

And only last month it added Ocarina Networks, a San Jose, Calif.-based data storage company whose technology helps reduce data management costs for an undisclosed sum. Last month Dell also announced that it was buying server-computer maker Scalene Systems.

No one seems to know where this will end, although most are betting on HP winning out just because it has a bigger purse. But that’s not necessarily a guarantee either.

Don’t leave your screens for too long as the only thing that is certain is that there will be developments here probably in the time it takes to make coffee.