3Par accepts new bid from Dell worth $1.69 billion
Computer maker Dell Inc. has matched a $1.69 billion offer from Hewlett-Packard Co. to buy the data-storage company 3Par Inc., raising the stakes in the bidding contest for the little-known company.business Updated: Aug 27, 2010 20:49 IST
Computer maker Dell Inc. has matched a $1.69 billion offer from Hewlett-Packard Co. to buy the data-storage company 3Par Inc., raising the stakes in the bidding contest for the little-known company.
The $27-per-share offer is worth three times the price of 3Par before Dell made its first bid last week, for $18 per share, or $1.13 billion. Dell and 3Par said on Friday that 3Par's board has accepted the latest bid from Dell, which only has to match the terms of other offers under its initial agreement with 3Par. In premarket trading, 3Par shares surged nearly 10 percent to $28.55 from Thursday's close of $26.03.
HP and Dell, two of the world's largest personal computer makers, are looking at 3Par as a way to build up their "cloud computing" businesses, which involve delivering software, data storage and other services to customers over the Internet.
HP made a $24-per-share bid for 3Par on Monday, one week after Dell's first offer of $18 per share. Dell responded Thursday morning with a bid for $24.30 per share; HP countered that with a $27-per-share bid in the afternoon.
The bidding contest for 3Par may continue, as both Dell and HP can afford to keep bidding for 3Par. Even though Dell is half HP's size by revenue, Dell has almost as much cash as HP. Dell reported $12.4 billion in cash and short-term investments at the end of last quarter. HP had $14.7 billion.
The back-and-forth bidding over previously obscure 3Par underscores how serious the two PC makers are about finding more profitable businesses than selling computers.
The companies that made personal computers affordable and ubiquitous must now draw new buyers by selling more sophisticated PCs at ever-lower prices. The cost of parts, meanwhile, has increased, putting even more of a squeeze on profits. Cloud computing holds the promise of richer profits for technology providers because many companies aren't buying their own computer servers for certain tasks anymore. Instead, they're paying to have software they would have stored on those machines delivered to them over the Internet.
Dell, HP and others are riding this trend by offering those kinds of cloud-computing services directly on a subscription basis, along with the equipment and software for customers to build their own cloud systems.
Dell is based in Round Rock, Texas. HP is headquartered in Palo Alto, California, and 3Par is based in Fremont, California.
First Published: Aug 27, 2010 20:47 IST