Dell May Drop Out of Bidding War Over 3PAR, Analysts Suggest

By Beecher Tuttle August 31, 2010

Dell is expected to abandon its efforts to acquire data storage provider 3PAR due to the rising asking price, according to a Reuters report. Over the last week, the PC manufacturer has been involved in a contentious bidding war with Hewlett-Packard over who will absorb 3PAR.

Dell has until Wednesday to match HP’s most recent offer, which exceeded $2 billion. However, a group of technology analysts and investors surveyed by Reuters suggest that Dell will be forced to drop out of the bidding war at some point soon because it does not have the resources of an HP.

The experts speculate that Dell will either pass on matching HP’s latest bid or give in after trumping the technology provider’s recent offer by only a few dollars. Dell told Reuters that it is currently evaluating the situation, leaving open the possibility that it could still make a move.

"Clearly both companies really want 3PAR as part of their product mix, and they've both recognized the importance of storage in these cloud computing architectures,” Peter Bell, of venture capital firm Highland Capital Partners, told the news source. “But I think it's hard to compete with HP. They've got the bigger balance sheet.”

The analysts point to Hewlett-Packard’s more substantial global sales force and its superior revenue stream, which is currently twice as large as Dell’s.

Meanwhile, the industry’s reaction to the bidding war has been rather mixed. Some experts see the potential purchase as a mistake for HP, as 3PAR’s stock has spent the majority of the year floating around $3 a share, which is $20 less per share than the latest bid. Other analysts feel that HP could boost 3PAR’s sales in a short period of time, making the move a clever one.   

In a recent blog post, TMC CEO Rich Tehrani noted that the “Dell and HP war over 3PAR has turned into a battle which I believe has moved beyond a fight based on the merits of the acquisition and it has become an important symbol for both computer makers that they are on the right track.”

“For HP, failure means the press will write stories about how weak they have become as a result the recent board and CEO issues,” Tehrani added. “For Dell, this deal symbolizes their strategy of taking HP on in the M&A arena as they battle to become tech mega-supermarkets. It seems failure for either is unacceptable.”

Check back with TechZone for any breaking news updates on this historic bidding war.

Beecher Tuttle is a Web Editor for TechZone360. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. He received his bachelor's degree in English from the University of Colorado.

Edited by Beecher Tuttle

TechZone360 Web Editor

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