Hewlett-Packard Co (HP) topped Dell Inc in the bidding for 3Par Inc for a third time, saying it would pay US$30 a share, or US$2 billion, for the data-storage provider.
That bested Dell’s earlier US$27-a-share proposal, which 3Par had accepted. Dell started the public bidding at US$18 a share on Aug. 16 and has matched or topped subsequent proposals from rival computer maker HP. Friday’s surge in 3Par stock to as high as US$32.58 suggests investors expect more jostling.
HP’s latest offer is more than three times the closing price for 3Par’s stock on Aug. 13, before Dell’s first bid was made public, and it’s about 10 times annual revenue at 3Par, which has lost money every year since going public in 2007. 3Par said late on Friday that HP’s last offer was superior to Dell’s latest terms, giving Dell three days’ notice that it intends to terminate their agreement.
The escalating price reflects the growing urgency for both HP and Dell to use acquisitions to fuel growth. It also underscores the lack of affordable runners-up capable of helping them vie with the world’s top storage providers, such as EMC Corp.
Under its agreement with Fremont, California-based 3Par, Dell can match other offers and will be paid a termination fee of US$72 million if 3Par accepts a different proposal.
“We’ve got the right to match other offers,” Dell spokesman David Frink said on Friday. “We are assessing and will act at some point in the best interests of investors and customers.”
Dell’s Jess Blackburn didn’t immediately respond to a request for comment after 3Par declared HP’s offer to be superior. Gina Tyler, a spokeswoman for HP, declined to comment on Friday.
3Par climbed US$6.43, or 25 percent, to US$32.46 on Friday in New York Stock Exchange composite trading. HP, based in Palo Alto, California, fell US$0.22 to US$38. Dell climbed US$0.14 to US$11.89 in NASDAQ Stock Market trading.
3Par sells hardware and software that make it easier and cheaper for companies to store information. HP and Dell are betting they can ramp up 3Par’s revenue by dispatching their larger sales teams to hawk its gear, said Shannon Cross, an analyst at Cross Research in Livingston, New Jersey.
“You just literally can target a wider addressable market,” she said. “The model has been proven to work.”
HP’s offer, valuing 3Par at almost three times the 20-day average of its stock price before Dell’s Aug. 16 bid, is the highest premium offered in a competitive situation among 19,036 completed and terminated deals tracked by Bloomberg since 2001.
In addition to strengthening its storage products, HP wants to show it can clinch the deal after the departure of its chief executive officer, said Aaron Rakers, an analyst at Stifel Nicolaus & Co. Former CEO Mark Hurd left on Aug. 6, following a probe that found he filed inaccurate expense reports to conceal a personal relationship with a marketing contractor.
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