Bidding war
There was much speculation that HP's counterbid for virtualised storage company 3PAR, after it had already agreed to be acquired by Dell, was primarily designed to ensure Dell didn't get the company on the cheap. And it appeared to have worked when Dell matched its offer yesterday.
However, it now looks like HP really wants 3PAR for itself, because it has raised its offer to $27 per share in cash. This tops Dell's revised offer of $24.30 per share by $200 million and puts the ball once more in Dell's court.
It's clear that the senior management of 3PAR would prefer to be acquired by Dell; it instantly accepted Dell's revised offer without even referring to the HP one and even agreed to pay a $72 million termination fee if it accepts another offer. But 3PAR is a public company, and thus the board is, in theory, obliged to put the interests of shareholders ahead of its own.
In the case of an acquisition - which marks the end of said shareholders' interest in the company - there really isn't much of an argument for doing anything other than accepting the highest bid. That's certainly how we would feel if we held 3PAR shares, which, sadly, we don't.
But corporate rivalry and egos aside, you have to wonder why 3PAR is suddenly worth two and a half times more than its average market value since its IPO in late 2007. Have a look at the Google Finance chart below to see what a premium there two companies are now prepared to pay, and it could go higher yet.
"Our revised proposal offers superior value to 3PAR's shareholders, while maintaining our disciplined approach to only pursuing acquisitions that we believe will strengthen our portfolio and create long-term value for our shareholders," said Dave Donatelli, EVP and GM of enterprise servers, storage and networking at HP.
"Not only is our offer superior to Dell's proposal, HP remains uniquely positioned to execute on this combination given the number of synergies between the two companies."
There is undoubted strategic value in boosting their storage offering, but you have to wonder if either Dell or HP's shareholders will get ROI at these kinds of prices. Then again, they said that about the Compaq merger - also following a recession in 2002 - but HP eventually delivered on that. It's also worth noting that HP's shares have not been dramatically affected by these bids.
UPDATE - 15:00, 27/8/10 - Dell has matched this new offer and had it accepted.
UPDATE 2 - 14:20, 27/8/10 - HP's gone up to $30 per share now.
