Dell Inc fired back in a bidding war for data storage company 3PAR Inc, matching a $1.8 billion offer by Hewlett-Packard Co and showing it isn't giving up yet against its bigger rival.

Dell said on Friday 3PAR had accepted its new $27-per-share bid, up 10 percent from its previous offer, in line with their agreement that allows Dell to match competing bids.

3PAR shares surged 9.4 percent to $28.50 in premarket trading, reflecting expectations for a higher offer from HP, which many see as the stronger player with $115 billion in annual revenue compared with Dell's $53 billion.

In a newspaper advertisement, placed overnight and appearing on Friday, HP launched a tender offer for all outstanding 3PAR shares at $27 cash each, showing it is prepared to be an aggressive suitor.

Dell's latest bid shows it wants 3PAR at least as much as HP does.

Dell, HP and other large technology vendors like International Business Machines Corp and Cisco Systems Inc have been acquiring companies and expanding into new technologies to offer corporate clients a wider range of products and services.

3PAR specializes in high-end data storage, a key part of cloud computing -- an increasingly popular technology that enables computer users to access data and software over the Internet, allowing companies to cut costs.

RISING VALUATIONS

August has been a particularly active month for deals. Intel Corp bid $7.7 billion for security software maker McAfee Inc last week.

But analysts say the bidding war over 3PAR has driven up valuations to unreasonable levels, raising the risk of the buyer overpaying.

Analysts say at current bids, 3PAR is valued at around eight times expected fiscal 2011 sales. Multiples above five are considered lofty in technology acquisitions.

3PAR has barely made a profit since its 1999 founding.

Some say, however, the company may be worth more than traditional metrics suggest, since it could grow exponentially with the massive sales channels of Dell or HP.

Consistent with its previous rationale for the acquisition, Dell also believes that its global brand and broad global reach will dramatically accelerate 3PAR's revenue growth, Dell said in a statement.

Earlier this week, a survey by Reuters of nine fund managers and analysts found the average final price is expected to be about $29 per share, and that HP would prevail.

The bidding war, a rare occurrence in the tech sector, started earlier this week when HP bid $24 a share for 3PAR, topping Dell's $18-per-share deal.

Dell responded by striking a new deal with 3PAR at $24.30 per share and increasing the termination fee to $72 million from $53.5 million.

That prompted HP to come back with a $27-per-share bid on Thursday.

(Reporting by Ritsuko Ando and Soyoung Kim; Additional reporting by Paritosh Bansal; Editing by Derek Caney and John Wallace)