Dell to Retain Compellents Management
Anderson also said there "was no significance" to the final purchase price being slightly higher per share than was the previously announced price. He also declined to comment on why the price was even disclosed if it wasn't finalized. Dell is not the only one looking to expand storage capabilities through acquisitions, but it may have the cheapest deal. EMC recently paid $2.25 billion for Isilon Systems and IBM acquired Netezza for $1.7 billion. Dell originally went after 3Par and lost the resulting bidding war to Hewlett-Packard, who offered $2.35 billion.Unlike what happened with 3Par, a second bidder was unlikely to emerge in this scenario, according to Fidacaro. Dell has been shopping around for companies to buy and Compellent had been mentioned several times as a potential target. Further, there are not a lot of buyers out there, as EMC, IBM and HP already have made their moves, and there aren't many independent storage vendors left for sale. Speculation about the potential acquisition had driven up Compellent's share price since August, but Dell's initial and final offers were nearly 18 percent lower than Compellent's stock price last week. Despite the below-market offer, Fidacaro said it was a "relatively reasonable" price, and lower than the $29 to $34 range expected in a "more competitive deal." Dell's EqualLogic line, acquired for $1.4 billion in 2008, is similar to Compellent's offering, just based on a different storage networking standard. Anderson downplayed the similarities, saying there was not a "tremendous overlap" between the two lines. The deal is expected to close in the "next two months," said Anderson. Dell will integrate Compellent into its storage lineup, which already includes PowerVault and EqualLogic. The "expectation is not to change the brand," said Anderson, but to keep the Storage Center name. Phil Soran, president and CEO of Compellent, will be staying on as a vice president at Dell. He will be "helping to solve data-storage problems," he said. Anderson said Dell will be retaining the entire leadership team. Dell also will be making offers to all 490 employees at Compellent to stay on in their roles, said Anderson. The PC maker further plans to keep Compellent's existing operations in Eden Prairie, Minn., the company said. "Bottom line, this is a growth story," Soran said. Compellent has a strong channel program and brings quite a few partners to deal, said Soran. As part of the arrangement, Dell has signed a reseller agreement that allows Dell to immediately start distributing Compellent products and allows Dell's sales team and customers to learn about Compellent before the deal closes, Dell said. However, since the companies will continue to operate independently until the deal is done, Dell has not reached out to channel partners yet, according to Soran and Anderson.
Fidacaro gave "credit" to Dell for being "disciplined" on the purchase price for Compellent.