3Par: HP raises stakes with another offer

Dylan Bushell-Embling
27 Aug 2010

The bidding war between HP and Dell for storage company 3Par is continuing, with HP now offering $27 a share.

The battle started this week, when HP upped Dell's initial $18 per share offer by $6 to $24.

Dell had fired back with a $24.30 offer, only to be outbid again by HP.

The latest offer values 3Par at $1.8 billion, net of cash.

As well as the hefty purchase price, HP would have to pay $72 million to Dell by way of a break fee.

Such huge bids for an unprofitable startup profit has left industry observers concerned that both firms are willing to pay too much. EMC products COO Pat Gelsinger said 3Par was “dramatically overvalued.”

In a FAQ submitted to the US SEC, HP rejected suggestions that it is overpaying.

“We have a strong business case and are confident this transaction makes strategic and financial sense,” the filing said.

With a market value four times greater than Dell’s, HP has the depth to win a bidding war. But sources close to the deal told FT that Dell will only need to match HP's highest offer to secure the acquisition.

HP shares fell 0.6% yesterday to $38.00. Dell stock dipped 0.3% to $11.75. 3Par shares, which were trading at $9.65 before Dell's initial offer, closed yesterday at $26.03.

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