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HP Tops Dell Bid for 3PAR

It is unclear whether Dell will now up its $18-a-share bid

Hewlett-Packard moved first thing Monday morning to upset Dell's pricey week-old bid for 3PAR, upping what was already a lavish 87% premium by a third to $24 a share, roughly a total of $1.6 billion compared to Dell's $1.15 billion offer.

HP claims its global reach and multiple channels can do more for the little proprietary high-end storage concern than Dell's can, besides it's right down the block. It hints it would keep 3PAR management, but would say nothing about how the entity would be run. Dell meant to leave 3PAR in California apparently as a free-standing operation while HP suggests it will integrate the thing.

HP basically admitted that it was slow off the dime in going after 3PAR and had a low-ball offer on the table when the Dell-3PAR deal was cut a week ago.

It is unclear whether the recent uproar in HP's executive suite and the board's summary dismissal of CEO Mark Hurd for reasons that are still a matter of speculation contributed to HP blinking.

HP server and storage chief David Donatelli said during a conference call that HP had had 3PAR in its sights for a year, had multiple meetings with 3PAR management and had done its due diligence. He dodged a direct answer to a question about why HP was late to the party and whether Hurd liked the idea or not.

It is also unclear whether Dell will now up its $18-a-share bid. The market evidently thinks it might. Wall Street punters have bid 3PAR's stock price up over $25.

In HP's offer letter to 3PAR president David Scott HP's chief strategy and technology officer Shane Robison said, "We are including with this letter a draft merger agreement with the same terms as your announced transaction with Dell but which eliminates the termination fee....we are prepared to execute the merger agreement immediately following your termination of the Dell merger agreement. We also are prepared to commence a cash tender offer reflecting our higher price. Our tender offer would, of course, be conditioned upon your board of directors' approval of a transaction with HP."

If HP gets 3PAR, it figures the deal will close by the end of the calendar year. It claims the hefty price will have no dilutive impact on its earnings or affect its existing relationship with storage vendor Hitachi.

In its public statements HP focused on the incremental business 3PAR would bring in.

The acquisition would fill in holes in HP's product line that would let it play in the cloud and with service providers. 3PAR has multi-tenancy and tiered storage.

HP said in a statement that the 3PAR's scalable next-generation storage architecture would accelerate HP's so-called Converged Infrastructure strategy of storage, servers and networking solutions. Donatelli, the guy who used to run EMC's storage business, insisted that 3PAR could be deployed in the mid-range as well as at the high end and didn't explain how 3PAR's proprietary widgetry fit in with HP's notions of commoditizing storage.

Dell was looking to 3PAR for diversification and to lessen its dependence on EMC, which is cuddling with Cisco these days while Cisco is trying to become a server merchant, a strategy that threatens both Dell and HP.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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