Dell Concedes As HP Wins 3Par Bidding War

The ten day long war bidding war for storage provider 3PAR has ended after HP made an unsolicited, all-cash bid of $33 (£21.44) per share.

Minutes after being rebuffed by yet another higher offer for 3PAR from Hewlett-Packard, Dell decided on 2 September to drop out of the high-stakes bidding process for the utility storage provider.

Thus, with its final $33-per-share, all-cash bid, the Palo Alto, Calif.-based IT superpower will gain the envied intellectual property of a small but mature storage company that specialises in handling data in massive amounts for large-scale IT systems.

Shareholder Dependent

Finalisation of the transaction, however, will be dependent upon the shareholders of each company, who will vote on the deal within the next few weeks.

For its trouble, Dell is entitled to receive a $72 million (£47 million) break-up fee from 3PAR upon the termination of its merger agreement they signed back on 16 August.

Due to the varied value of the company’s common and enterprise stock, there was little agreement 2 September on what the final charge would be to HP. The Associated Press estimated $2.1 billion (£1.4 billion), and others – including the Wall Street Journal and Bloomberg News – estimated the number to be as high as $2.4 billion (£1.6 billion).

For its part, 3PAR itself refused to offer a guess at a final price.

Dell Ends Discussions

Dell’s final offer to acquire 3PAR at $32 (£20.79) per share of common stock was not accepted by 3PAR’s board of directors. Dell said its improved offer also had included a proposed commercial relationship and an increased break-up fee.

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

Earlier in the day 1 September, Dell had increased its offer for 3PAR from $27 (£17.54) to $32 (£20.79) per share, with Hewlett-Packard subsequently upping its own to $33 from $30 a few minutes later.

Dell had written into its original agreement with 3PAR that it had the right to match any competing offer.

Bidding War

Since the bidding began on 23 August, each time Dell put forth an offer, HP countered with a substantially higher one. HP’s first bid was $24 (£15.59) per share, or about $1.6 billion (£1 billion).

When the bidding battle ended 2 September with HP’s final $33 offer, it meant that the Dell-HP war of bank accounts cost HP at least an additional half-billion dollars.