Hewlett -Packard: Topped Dell in the 3PAR Inc. bid

Hewlett-Packard Co. offered to pay $1.6 billion for 3PAR Inc, topping rival Dell Inc's bid by a third in a surprise move that sparked a bidding war for the data storage company. Shares in 3PAR soared 45 percent to above HP's $24-a-share offer, as investors were anticipating a higher bid.
Analysts are of the opinion that "3PAR's expertise in a niche area of high-end storage makes it a particularly attractive target for companies like HP and Dell. Its scarcity value means bidders might be willing to pay more than 3PAR appears to be worth on paper."
"We expect to see at least one to two more iterations before this process is over -- not based on value, but on the deal being 'strategic' in solidifying either's position in the storage space," said Collins Stewart analyst Louis Miscioscia.
"What we're seeing is a shift towards convergence. You have these one-stop shops forming that span everything from servers to networking and storage," said Morgan Keegan analyst Brian Freed. "You're going to see this natural consolidation of hundreds and thousands of players into a smaller number of dominant players."
Resignation of Chief Executive Officer Mark Hurd made the analysts speculate that HP's would be sidelined from mergers and acquisitions. "I have absolutely no concerns as it relates to this deal," said the head of HP's enterprise server, storage and networking business.
HP shares fell 2 percent to $39.04. Shares of 3PAR, which made a loss on revenue of $194 million in its last fiscal year, jumped 45 percent to $26.09.
With bold acquisition strategy in place, HP has diversified beyond computers which include network device maker 3Com, tech services provider Electronic Data Systems and mobile device company Palm.
Cross Research analyst Shannon Cross said another bidder could emerge, although HP, with a market capitalization of around $93 billion, has an advantage over Dell, which is valued at under $24 billion. Both companies have the capacity to bid up, but HP has a significant cash balance and significant cash flow, and it has over two times the revenue of Dell," Cross said.
HP made a bid for 3PAR even before Dell announced its deal, said Donatelli. The company made its initial bid in July, but held off while 3PAR was in exclusive talks with Dell. The $24-a-share offer for 3PAR marks a 33 percent premium to last week's $18-per-share bid by Dell, which the storage company's board has approved. At the time, Dell's bid was 87 percent over 3PAR's share price of about $9.65. For 3PAR, a deal with companies like Dell or HP would give it a broader sales reach, helping it compete against rival EMC as well as smaller players like Isilon Systems Inc and Compellent Technologies Inc.

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