Hewlett-Packard Offers to Buy 3Par, Trumping Dell Bid
Hewlett-Packard Co., the world’s largest personal-computer maker, offered to buy 3Par Inc. for about $1.6 billion, topping Dell Inc.’s bid for the maker of data-center equipment and software.
The bid of $24 a share in cash is 33 percent higher than Dell’s offer, HP said today in a statement. Dell offered $18 a share in cash, or about $1.15 billion, for 3Par on Aug. 16.
HP and Dell are using acquisitions to challenge Cisco Systems Inc. and International Business Machines Corp. in the market for data-center products and services, which generate higher profits than desktop and laptop computers. Fremont, California-based 3Par sells hardware and software that makes it easier and cheaper for companies to store information. Its stock rose past HP’s offer, signaling that some investors expect a bidding contest.
“One of the growth areas in technology is in the enterprise storage space,” said Joel Levington, managing director of corporate credit at Brookfield Investment Management Inc. in New York. “3Par’s products fit well in there. It’s an easy way to gain product breadth.”
3Par rose $8.05, or 45 percent, to $26.09 at 4:01 p.m. in New York Stock Exchange composite trading. The stock closed at $9.65 the last trading day before Dell’s bid. HP, based in Palo Alto, California, fell 81 cents to $39.04. Round Rock, Texas- based Dell lost 13 cents to $11.94 on the Nasdaq Stock Market.
HP said on a conference call that it has been working on the proposed acquisition since before the departure of Mark Hurd, who stepped down as chief executive officer on Aug. 6 after an investigation found he filed inaccurate expense reports to conceal a personal relationship with a marketing contractor.
The offer is HP’s second bid for 3Par, Dave Donatelli, who heads HP’s storage and server division, said today in an interview. The PC maker has been in talks with 3Par for “some period of time,” he said, declining to comment further.
In a regulatory filing today, 3Par said two companies in addition to Dell expressed interest in acquiring the company. 3Par rejected an offer from one of the companies in July, according to the filing.
David Frink, a Dell spokesman, declined to comment. John D’Avolio, a spokesman for 3Par, didn’t have a comment.
HP’s offer values the unprofitable 3Par at almost 2 1/2 times its worth before Dell’s bid, and at more than eight times its sales of $194.3 million in the year ended March 31. 3Par’s revenue rose 5.2 percent from 2009, and it has about 670 employees.
“It’s a very exorbitant price,” Levington said. It probably doesn’t make economic sense for Dell to counter, he said.
Dell and HP have expanded their data-center businesses through acquisitions. HP bought Marlborough, Massachusetts-based 3Com Corp., a networking-gear maker, for $2.7 billion this year. Dell acquired EqualLogic Inc. in 2007 for $1.4 billion as the foundation for its data-storage product. Last month, Dell agreed to buy closely held storage company Ocarina Networks and server- computer maker Scalent Systems Inc.
Other rivals are also racing to broaden their enterprise- technology businesses through deal making. Oracle Corp., the world’s second-biggest software maker, bought Sun Microsystems Inc. for about $7.3 billion to expand in hardware.
3Par was co-founded in 1999 by chief technology officers Jeff Price and Ashok Singhal, who had earlier worked at Sun. CEO David Scott, who previously worked at HP, has held his position since 2001. Another 3Par co-founder is Robert Rogers.
3Par’s chairman is Kevin Fong, a former managing partner at Mayfield Fund, a Silicon Valley venture-capital firm that invested in Internet shares as the dot-com bubble burst in 2000.
3Par will add to HP’s strategy of combining storage, server and networking products, Donatelli said in the interview. The company will increase 3Par’s revenue by selling its products overseas and investing in its research and development, he said.
The deal, which would close this year, is the third purchase for HP worth more than $1 billion in less than a year. The company agreed to buy 3Com in November, and in April it agreed to pay $1.2 billion for smartphone maker Palm Inc.
JPMorgan Chase & Co. is HP’s investment bank on the deal, and Cleary Gottlieb Steen & Hamilton LLP is its legal adviser.