Dell Ends 3PAR Talks After HP’s $2.4 Billion Bid

Someone had to blink. The high stakes game of chicken between Dell and HP is over as Dell has officially ended acquisition talks with 3PAR after HP’s $33 per share, $2.4 billion proposal.

At $32 per share, Dell’s final offer was not accepted by 3PAR’s board of directors. Dell’s last-ditch pitch also included some new conditions that may have soured the deal.

In a press release issued today, 3PAR stated that Dell’s revised acquisition proposal also included an increased termination fee of $92 million payable to Dell as a condition to accepting a superior proposal, and a multi-year reseller agreement with Dell, which contained fixed pricing and other terms that the 3PAR board of directors determined to be unacceptable.

Dell’s statements about pulling out of negotiations with 3PAR were short and to the point.

“We took a measured approach throughout the process and have decided to end these discussions,” said Dave Johnson, senior vice president, corporate strategy.

“We will continue to put the interests of our customers and shareholders at the forefront of all our decisions,” said Brian Gladden, chief financial officer . “Our focus is to create long-term value.”

There has apparently been a quiet back and forth over the past few days. According to a statement from 3PAR, following its notice of intent to terminate the merger agreement with Dell, and prior to receiving HP’s revised proposal, Dell increased its offer price from $27 per share to $32 per share.

The 3PAR ping pong match between Dell (NASDAQ: DELL) and HP (NYSE: HPQ) began at $1.15 billion and quieted down for a few days after reaching a fever pitch last Friday when HP countered Dell’s $27-per- share offering with a $30-per- share bid, bringing the value of the deal to about $2 billion. Later in the day, 3PAR (NYSE: PAR) announced that the HP bid was a “superior offer” to Dell’s, and 3PAR’s board of directors notified Dell of its intention to terminate the merger agreement and giving Dell three days to up its offer.

There are some organizations out to hamper the acquisition or at least grab a share of the billions of dollars being thrown 3PAR’s way as a pair of lawsuits have been filed against the company in the past 24 hours.

Crossroads Systems filed suit against 3PAR and several other companies yesterday in U.S. District Court for the Western District of Texas, Austin Division. The suit alleges that 3PAR, American Megatrends, Chelsio Communications, DataCore Software, D-Link, iStor Networks and Rorke Data, infringed on a patent related to Crossroads’ router technology.

Additionally, the International Business Times reported this morning that the Steamfitters Union Local 449 Pension Fund has filed a lawsuit in California Superior Court of Alameda County, in which the group alleges that 3PAR’s leadership rigged the bidding process to make money at the expense of shareholders.

3PAR would not comment on the pending lawsuits.

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