HP Enters Bidding War with Dell for 3PAR

3PAR, a solid, consistently well-performing independent storage company for the better part of the last decade, suddenly has a couple of first-tier suitors interested in an acquisition.

Hewlett-Packard, despite already being loaded with one of the largest storage product catalogs in the world, announced Aug. 23 that it would enter into a bidding war with Dell by offering $24 per share for 3PAR — which amounts to enterprise value of $1.6 billion.

HP said the proposed transaction represents about a 33 percent premium above the price proposed by Dell. HP’s proposal is not subject to a financing contingency and already has been approved by HP’s board of directors.

Dell on Aug. 16 had announced that it planned to buy 3PAR, whose scale-out software can handle massive amounts of data, for $1.15 billion. Thus the stage is set for a bidding war similar to what EMC and NetApp experienced in 2009 in the Data Domain acquisition, in which EMC ended up paying $2.3 billion for the deduplication storage company.
Dell has offered $18 per share for 3PAR.

Dell’s most recent storage addition was the $1.4 billion acquisition of EqualLogic in 2007. EqualLogic, whose iSCSI-based architecture is aimed at midmarket companies, and 3PAR, whose products are designed for large-scale systems, address separate sections of the market.

Fremont, Calif.-based 3PAR originally made its reputation by delivering a scalable, dependable thin-provisioning feature. It is a hot storage property because its clustered architecture is tailor-made for cloud systems that deliver software as a service.

HP Executive Vice President Dave Donatelli said that the addition of 3PAR, which has about 600 employees, will accelerate the company’s Converged Infrastructure strategy.

During an Aug. 16 conference call with media and analysts, Dell executives made it clear that they intend to rapidly grow the company as a new division, with expansions planned on both the engineering and sales side.

“We’re seeing increasing demand for a new class of storage,” Brad Anderson, senior vice president of Dell’s Enterprise Product Group, said during that call. “For businesses and models that provide storage as a utility, we think 3PAR is a fantastic addition to that lineup.”

So the war begins.