Storage wars
That'll teach us to report a bid as an acquisition. A week ago we said Dell was acquiring virtualised storage company 3PAR for $1.15 billion. Of course what had actually happened was that the two companies had come to an agreement and, usually, the completion of the acquisition is a mere formality.
But these are not normal times and the world's IT giants are finally viewing the difficult macroeconomic environment as an opportunity to consolidate their positions with acquisitions. Until now, PC rivals HP and Dell have done a good job of not treading on each other's toes as they strengthen their positions in the enterprise market, but now that's all changed.
Today, HP announced it was bidding $24 per share for 3PAR - a 33 percent increase on Dell's bid of $16 per share. Considering Dell's bid represented a 66 percent premium on a 3PAR share price of around $10 before the bid, and 3PAR's shares are currently trading at over $25 as a result of HP's bid, we congratulate anyone who bought 3PAR stock before 16 August.
"HP's proposal offers superior value to 3PAR's shareholders. Our global reach, strong routes to market and commitment to innovation uniquely position HP as the ideal fit for 3PAR," said Dave Donatelli, EVP and GM of enterprise servers, storage and networking at HP. "We've seen great momentum with our Converged Infrastructure strategy, and 3PAR accelerates that strategy, particularly in cloud and scale-out markets."
A few law firms had apparently looked into legal claims against 3PAR for offering the company to Dell without trying hard enough to see if there was anyone else who'd pay more. Furthermore, the cloud storage market is looking red hot right now, with the news that HDS (Hitachi Data Systems) has bought ParaScale.
HP seems to have concluded that it can't afford to let Dell get too strong in this market, and noe Dell is going to have to pay at least half a billion dollars more if it still wants to own 3PAR.
We have reproduced HP's letter to the 3PAR board overleaf.