3Par's Fong, After Bad Bets, May Be Redeemed by HP-Dell Bidding
3Par Inc. Chairman Kevin Fong
3Par Inc. via Bloomberg
Kevin Fong, chairman of 3Par Inc.
Kevin Fong, chairman of 3Par Inc. Source: 3Par Inc. via Bloomberg
Aug. 24 (Bloomberg) -- Nancy Havens-Hasty, president of Havens Advisors LLC, a merger arbitrage fund manager, talks about takeover bids for data-storage provider 3Par Inc. Dell Inc. is readying a sweetened offer for 3Par after its earlier bid got scuttled by a $1.6 billion proposal by Hewlett-Packard Co., according to a person familiar with the matter. Havens-Hasty, speaking from New York, also discusses BHP Billiton Ltd.'s $39 billion hostile buyout bid for Potash Corp. of Saskatchewan Inc. Havens-Hasty speaks with Bloomberg's Susan Li. (Source: Bloomberg)
3Par’s Fong, After Bad Bets, May Be Redeemed by HP-Dell Bids
3Par Inc. via Bloomberg
3Par is a data-storage provider whose investors include Mayfield, Menlo Ventures and Worldview Technology Partners.
3Par is a data-storage provider whose investors include Mayfield, Menlo Ventures and Worldview Technology Partners. Source: 3Par Inc. via Bloomberg
Kevin Fong, chairman of 3Par Inc., may find redemption in a bidding war between Hewlett-Packard Co. and Dell Inc. after bad bets marred his tenure at venture capital firm Mayfield Fund.
Fong left Mayfield in 2008 after telecommunications startups foundered and institutional investors such as Harvard University and Stanford University opted not to put money in a fund begun in 2005. Profitable investments early in Fong’s two- decade career, including Redback Networks Inc., had burnished Mayfield’s reputation.
“Mayfield was not just a firm, it was a legendary firm,” said Steve Blank, who has helped found eight companies including Mips Technologies Inc., which was backed by Mayfield. “You mention them now and people go, ‘Who?’”
Fong is poised to regain some of his lost cachet as HP and Dell vie for 3Par, a data-storage provider whose investors include Mayfield, Menlo Ventures and Worldview Technology Partners. Since Dell’s bid a week ago, 3Par shares have almost tripled, lifting the value of Mayfield and Worldview’s stakes by more than $100 million apiece and Menlo’s by about $150 million, according to Bloomberg data.
Those gains may increase in the coming days. Dell is readying a sweetened offer for Fremont, California-based 3Par after its earlier bid was topped by a $1.6 billion proposal by Hewlett-Packard, according to a person familiar with the matter.
Fong declined to comment, as did 3Par spokesman John D’Avolio and Mayfield Fund spokeswoman Kamini Ramani.
3Par rose 95 cents, or 3.6 percent, to $27.04 at 4 p.m. in New York Stock Exchange composite trading. It surged 45 percent yesterday after HP’s bid. The stock closed at $9.65 on Aug. 13, the last trading day before Dell’s offer was made public.
Early 3Par Investor
HP, the world’s largest personal-computer maker, said it would pay $24 a share, 33 percent more than Dell, which on Aug. 16 said it would pay $18 a share. The companies are using acquisitions to compete with Cisco Systems Inc. and International Business Machines Corp. in markets for data-center products and computing services. 3Par’s technology makes it easier and cheaper for businesses to store information.
Fong, 56, first invested in 3Par in 1999, the year the company was founded. 3Par raised another $178 million in four financing rounds before going public in 2007. At the time of its IPO, 3Par had a market value of about $840 million. That dropped below $300 million in 2008 and jumped to $1.63 billion after HP’s offer yesterday.
The company Fong helped nurture is now in the crosshairs of two cash-rich computer makers. HP has $14.7 billion in cash, compared with $11.7 billion for Dell.
Pricey Target
Dell needs 3Par to bolster the technology that helps customers’ data centers handle growing reams of information, while HP wants 3Par to stem market-share losses in storage systems, said Kaushik Roy, an analyst at Wedbush Securities in San Francisco. “Even the Dell price is expensive,” Roy said. “For HP they are paying way too much.”
Prior to joining Mayfield in 1988, Fong worked at technology companies including HP. His early investments at Mayfield included Redback Networks, which went public in 1999. He also backed Alantec, which was sold to Fore Systems Inc. in 1996 for $821 million.
When the technology and telecommunication markets dried up starting in 2000, fortunes for Fong -- and Mayfield -- turned. The sale of Tasman Networks Inc. to Nortel Networks Corp., announced in 2005, was for little more than the company had raised, while Mendocino Software is out of business. In 2005, Mayfield raised a $375 million fund, less than half the amount it attracted for its previous fund, five years earlier.
‘Huge’ Successes, Failures
In 2000, Mayfield took just three days to gather about $1 billion from investors that included Harvard, Stanford and the Massachusetts Institute of Technology. All three universities indicated they wouldn’t put money in the fund raised in 2005 amid concern over losses, people familiar with the matter said at the time.
Fong is still a special adviser at GSR Ventures, a Mayfield affiliate that focuses on investments in China. In 2009, he was ranked No. 79 on Forbes magazine’s 2009 “Midas List” of the top 100 venture capital dealmakers. The magazine cited the 2007 sale of LGC Wireless to ADC Telecommunications for $169 million and the $425 million sale of Mobile 365 to Sybase Inc.
He’s also an investor in social gaming, an area favored by several venture capital firms that dot Menlo Park’s Sand Hill Road and surrounding parts of Silicon Valley. According to GSR’s website, Fong invested in Playdom Inc., the maker of games that was snapped up by Walt Disney Co. for $563.2 million in July.
“In every firm up and down Sand Hill Road, you’ll find people who have huge successes and huge failures,” said Vish Mishra, a venture director at Clearstone Venture Partners in Menlo Park, who’s known Fong for over a decade. The war for 3Par “bodes well for him.”
To contact the reporter on this story: Ari Levy in San Francisco at alevy5@bloomberg.net
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