Dell trumps HP by offering 3Par $0.30 per share more, sparks bidding war (1)

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3Par said it plans to talk with HP to "fully evaluate" whether the latter's "unsolicited acquisition proposal is a "Superior Proposal"."

The Fremont, California-based company also said it has informed Dell about its decision and though it continues to recommend Dell's takeover bid of $1.16 billion or $18 per share to its shareholders, if its board ultimately decides that HP's bid is "superior," Dell will have three days to sweeten its offer.

However, Dell did not wait for 3Par to decide whether HP's bid was "superior" - on Thursday, the PC maker said it has sweetened its offer by $6.30 per share i.e. it will pay $0.30 more than what HP is ready to pay for each 3Par share. It said 3Par has accepted its new bid and the deal will add to its earnings, excluding one-time items, from 2012.

"Over the past several years, Dell has invested heavily in the IP and infrastructure necessary to provide customers with a comprehensive and differentiated set of storage solutions," the Round Rock, Texas-base PC company said in a statement. "The 3Par acquisition complements and extends the breath of Dell's storage portfolio."

"Storage is at the forefront of this strategy," said Dave Johnson, Dell's senior vice president of corporate strategy, in a prepared statement. "With the 3PAR acquisition, Dell will have the broadest set of differentiated storage solutions in the market today."

Palo Alto, California-based HP did not comment on Dell's new offer. The company board is expected to evaluate Dell's new offer and either will match Dell's bid or will walk off.

According to market analysts, neither of the two companies is expected to give up soon.

"It would be very odd for someone to back down soon," said Enterprise Strategy Group analyst Mark Peters.

The reason is because both the companies want to become one-stop shops like Cisco Systems Inc. or International Business Machines Corp. (IBM) for all corporate technology needs, including computer servers, storage, and software.

Companies need a place to store vast amounts of data: video clips, e-mail, reports and presentations. They also need tools to help them manage it.

And with the amount of data growing every day, companies are turning to products and services that will help them use data space more efficiently to hold the billions of emails, customer orders and other vital information needed to run their businesses.

Not surprisingly, Dell and HP are both trying to boost their investments in the data center products and services business, which generate higher margins than PCs, and especially in cloud computing and virtualization technology that enable users to move data away from desktop PCs and local servers to remote locations and access data and software from a variety of places and devices using the Internet.

And, this is where 3Par fits in.

3Par is seen as a leader in data storage and management tools as it builds high-end storage systems that help companies store and manage their data efficiently, using features such as dynamic tiering and thin provisioning, in multi-tenant cloud-computing environments.

Especially Dell and HP are both eyeing 3Par's key technology called "thin provisioning." The technology enables scaling up or down data storage space as per user's needs at any given moment and will help Dell or HP use expensive storage hardware more efficiently by sharing it among multiple customers.

According to Brookfield Investment Management Inc.'s Joel Levington, "One of the growth areas in technology is in the enterprise storage space" and 3Par's products "fit well in there."

Agrees ThinkEquity analyst Rajesh Ghai. "This is a calling card into the cloud market," Ghai said. "It's a question about profitability in the long term and having a strategic position. If you're going to be a player in the cloud market, and you have networking, you have servers, you need storage to compete effectively."

But who needs 3Par more? And who will win the bidding war? Click   here   to find out.