Dell Ups the Ante in 3PAR Bidding War

Dell upped its bid for storage vendor 3PAR today, besting HP’s offer by a slim margin of $0.30 per share in cash, or approximately $1.6 billion, net of 3PAR’s cash.

Dell (NASDAQ: DELL) had previously signed an agreement to acquire 3PAR (NYSE: PAR) for $18 per share, with a provision for matching competing bids.

Dell and 3PAR have signed an amendment to the agreement reflecting the new offer price of $24.30 per share. The amendment also includes a revised termination fee of $72 million, which is payable in the event that 3PAR receives and accepts another unsolicited acquisition proposal that its board determines to be superior to Dell’s increased offer.

Dell raised its offer after HP (NYSE: HPQ) sparked a bidding war over 3PAR with a $24.00 per share, $1.6 billion offer of its own earlier this week.

Dell is after 3PAR for its “utility storage” solution, which Dell believes will boost its presence in the market for cloud-based storage applications.

3PAR bills its multi-tenant, clustered storage architecture as a platform for the delivery of software and hardware as a service for virtualized data centers and cloud computing.

However, Dell’s new offer does not necessarily signal the end of the bidding war. Enterprise Strategy Group founder and senior analyst Steve Duplessie believes HP will respond with a higher offer. He expects HP will eventually win out when the bidding reaches about $35.00 per share.

Dell’s new cash tender offer commenced on August 23, 2010, is for all outstanding shares of 3PAR common stock, without interest, and subject to reduction for any federal back-up withholding or other taxes. 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. Following acceptance for payment of shares in the tender offer and completion of the transactions contemplated in the merger agreement, 3PAR would become a wholly-owned subsidiary of Dell.

According to a statement from 3PAR, the company’s board of directors “continues to unanimously recommend that 3PAR stockholders accept Dell’s tender offer and tender their shares in the offer.”

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Kevin Komiega
Kevin Komiega is an Enterprise Storage Forum contributor.

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