Hewlett-Packard's move to up the ante in its attempt to acquire 3PAR comes only about 5 hours after Dell bid $1.6 billion, topping HP's previous bid of $1.5 billion.
Hewlett-Packard Aug. 26 wasted little time in firing a serious monetary
salvo across Dell's bow, increasing its bid by nearly $300 million to $1.8
billion-$200 million more than Dell's last offer-in the bidding war for utility
storage maker 3PAR.
The move came only about 5 hours after Dell
had bettered HP's second bid of $1.5 billion
by more than $100 million,
raising its own offer to about $1.6 billion.
HP's $27-per-share cash bid is the second time the company has overtaken Dell
in pursuit of the relatively small, 600-person 3PAR, which is a hot storage
tendered its $1.5 billion offer Aug. 23.
HP's new offer values 3PAR at 262 times the company's earnings before
interest, taxes, depreciation and amortization during the past year, according
to Bloomberg financial data. 3PAR's entire market cap is $1.63 billion.
3PAR, which went public in November 2007, saw its stock price drop 2.7 percent
to $26.03 upon close of trading Aug. 26. In after-hours trading, the price
increased to $27.73 by 6:30 p.m. EDT.
Until the bidding war began a few weeks ago with HP's original offer, 3PAR's
stock had sold for under $10 for more than a year. The shares closed at $9.65
on Aug. 13, the last trading day before Dell's first agreement to purchase the
company was made public Aug. 16. However, shares rocketed up 45 percent on Aug.
23, when HP announced its $1.5 billion bid.
3PAR Director of Media Relations John D'Avolio told eWEEK the company would
have no comment on the bidding war at this time. HP's offers are unsolicited;
Dell and 3PAR already have signed an agreement in principle to execute the
Why is 3PAR so hot?
3PAR is now a prime asset primarily for two reasons: Firstly because its
clustered, utility-type architecture is tailor-made for cloud systems that
deliver software as a service, and cloud storage systems are in demand at this
Secondly, there aren't that many leading-edge storage companies left to be
acquired. Young, progressive companies like EqualLogic, Data Domain, Storwize,
Ocarina, Bycast, Mimosa Systems and Kazeon already have been scooped up by
large systems providers EMC, IBM,
NetApp and Dell and by cloud storage providers such as Iron Mountain Digital.
"We're clearly in a seller's market right now, with not many things to
sell," Pat Gelsinger, EMC's president
and COO of Information Infrastructure
Products, told a group of journalists at a briefing in San
Francisco Aug. 26.
EMC and Dell share about 155,000 customers
worldwide, so EMC has more than a passing
interest in whether its largest storage sales partner adds new products via
acquisition that could compete with its own wares in the same marketplace.
"3PAR is a high-end, block-only solution. As a company, they've been
fairly flat for several quarters with trivial profitability. They haven't been
setting the world on fire. So why is there a war over them? Clearly, there
aren't a lot of choices left," Gelsinger said.
"HP [already] relies on Hitachi
for their high-end offering, so clearly they're saying, 'I need to have a
better high-end offering,' while Dell is saying, "I need to be a more
effective enterprise player.' Dell is thinking: higher-volume, lower-margin PCs
and consumer products, or higher-margin, stickier-business high-end enterprise?
They have to grow in the enterprise."
Gelsinger, who was one of the prime movers behind Intel's new multicore
processors during his long career at the chip maker, said he fully expects Dell
to continue to move up the stack-not just in storage, but in other areas, such
as networking and data center management software and services.
Another reason why 3PAR attracted HP, Dell
Back in March, 3PAR
began its own brand of autonomic storage tiering,
Optimization. This, plus the current 3PAR catalog and its list of dedicated
customers, is apparently what made Dell and HP act.
IBM championed the concept of autonomic
computing for about a decade. Autonomic computing is a self-management
mechanism for a system or systems that can make preprogrammed "decisions"
to solve problems-and solve them very quickly-to keep the data center
Optimally, the process actually prevents problems from happening in the
first place through a combination of business and operational intelligence,
gained by a constant collection of data. 3PAR's version anticipates data
blockages and solves them before they happen, according to the company.
3PAR Adaptive Optimization follows this concept to enable high-end-type
storage systems to achieve an efficient distribution of data over the
application life cycle, without needing intervention by an administrator, the
The software intelligently monitors subvolume level performance, then
applies user-created policies that autonomically and nondisruptively rebalance
a workload across tiers to continually and flexibly meet changing application
demands, 3PAR Vice President of Marketing Craig Nunes told eWEEK.