Dell gives up bidding war for 3Par Inc.

HP to pay $2 billion for California maker of storage hardware

By: JournalNow Staff | THE ASSOCIATED PRESS
Published: September 03, 2010

SEATTLE

Dell Inc. is walking away from a bidding contest with rival Hewlett-Packard Co. for 3Par Inc., a maker of data-storage systems.

Dell said yesterday that it won't match HP's offer to pay $33 a share for 3Par, or about $2.07 billion. Dell's decision came barely an hour after 3Par announced that it had received Dell's revised offer of $32 a share and then the even stronger bid from HP.

In a statement, 3Par said that Dell's revised offer contained new terms that it found unacceptable, including a multiyear reseller agreement with Dell that would remain in effect even if 3Par were to be bought by another company.

The board of 3Par deemed HP's offer superior. It is 83 percent above Dell's first offer and more than three times what 3Par stock was trading at the time.

"We took a measured approach throughout the process and have decided to end these discussions," said Dave Johnson, Dell's senior vice president for corporate strategy.

Shares of 3Par rose 80 cents to close at $32.88. Dell shares jumped 24 cents to close at $12.36, and shares of HP, which is based in Palo Alto, Calif., increased 47 cents to $39.68.

Dell, based in Round Rock, Texas, made the first offer for 3Par on Aug. 16, at $18 a share. As part of a deal between the two companies, 3Par -- based in Fremont, Calif. -- must pay Dell a $72 million termination fee.

HP and Dell, two of the world's largest makers of personal computers, were looking at 3Par as a way to build up their data centers and "cloud-computing" businesses, delivering software, data storage and other services to customers over the Internet.

Both companies are racing to expand beyond the PC business, where profits are shrinking. Computer-makers have been slashing prices to stay competitive as the cost of LCD screens, memory and other parts increases.

Dell plans to close its desktop-computer assembly plant in Winston-Salem in January.

Analysts have been divided on whether buying 3Par was a make-or-break move for either Dell or HP. HP has its own line of high-end storage appliances similar to what 3Par could bring, while Dell resells technology from data-storage leader EMC Corp.