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Dell / HP Bidding War for 3Par Reaching Ludicrous Levels

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hp-logo.jpg Lately, we've been feeling rather sorry for Dell's media relations people - they keep having to put out press releases about how their employer has purchased data storage company 3Par, only to learn later that it hasn't actually happened.

Dell first announced its acquisition of 3Par a couple weeks ago , when it made an $18 per share bid for the company. But a week later, HP triggered a frenzied bidding war when it offered $24 a share for the company. The back and forth bids have continued, increasing first to $27 per and now the latest offer from HP is $30 per share, made over the weekend to trump Dell once again and make yet another press release obsolete.

Making the competition all the more interesting is that it comes on the heels of the high-profile ousting of HP CEO Mark Hurd, who many believe would have avoided such a deal. Many analysts say they believe the company is trying to show its board is unified in the absence of a CEO, and most predict HP will win the bidding war.

But what's really driving the (attempted) deal-making is growth in cloud computing. Both giant companies see massive growth potential in the cloud, and among the names making the related data storage hardware, tiny 3Par is the most logical target for acquisition (bloated IBM and EMC are among the other leaders).

The Wall Street folks will also point out that both Dell and HP have lots of cash on hand that they're apparently ready to burn, even if it means spending more on 3Par than the 2 billion dollars it's currently valued at.

"They're getting into crazy levels here, and on paper, 3PAR isn't worth what they're bidding," Michael Holt, an analyst at Morningstar, told CNN . "There's a point at which the winner's curse will do them in -- even perfect execution will never make that up to their shareholders."

For its part, 3Par seems to be enjoying the show from where it sits. Company representatives say the current offer on the table from HP is a "superior proposal." Well, duh; it puts the purchase amount right around that 2 billion mark. But Dell has a merger agreement with 3Par that gives it three business days to respond to any competing offers, and the Texas company says it is assessing its options.

The biggest winner of all in the bidding war could be a banker named Frank Quattrone , who is advising 3Par in the negotiations. He was also involved in the last big tech bidding war, when EMC outbid NetApp last year to snag Data Domain for $2.4 billion.

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LastMitch
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Making the competition all the more interesting is that it comes on the heels of the high-profile ousting of HP CEO Mark Hurd, who many believe would have avoided such a deal. Many analysts say they believe the company is trying to show its board is unified in the absence of a CEO, and most predict HP will win the bidding war.

Nice article.

HP won the bid.

On September 27, 2010, HP completed the acquisition for $2.35 billion.

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