HP trumps Dell with $24-per-share bid for 3Par

Hewlett-Packard is ready to outspend Dell to win control of storage vendor 3Par.

HP announced Monday an offer to acquire 3Par for $24 a share in cash, or $1.6 billion total. The bid one-ups Dell's offer from a week ago to buy the storage specialist for $18 per share, or $1.15 billion.

Fremont, Calif.-based 3Par sells virtualized storage arrays that allow companies to buy storage only as they need it. HP is looking at 3Par's virtualized products to complement its own Converged Infrastructure data center as more businesses take to the cloud to integrate their server, networking, and storage needs. HP said that the addition of 3Par's storage systems will help it strengthen and diversify its own product lineup.

"HP's proposal offers superior value to 3Par's shareholders," Dave Donatelli, HP's executive vice president and general manager for Enterprise Servers, Storage and Networking, said in a statement. "Our global reach, strong routes to market and commitment to innovation uniquely position HP as the ideal fit for 3Par. We've seen great momentum with our Converged Infrastructure strategy, and 3Par accelerates that strategy, particularly in cloud and scale-out markets."

Dell's offer has been okayed by the boards of directors of both Dell and 3Par, and 3Par president and CEO David Scott already seems to envision a future with Dell. However, the HP bid is 33 percent higher and has been approved by HP's board. Scott himself hails from HP, having run the company's storage program before taking the reins of 3Par. If it wins, HP expects the acquisition would close by the end of the year.

In a letter to Scott, HP's chief technology officer, Shane Robison, explained why he believes HP and 3Par would make a good match.

"In addition to the compelling value offered by our proposal, there are unparalleled strategic benefits to be gained by combining these two organizations," wrote Robison in the letter. "HP is uniquely positioned to capitalize on 3Par's next-generation storage technology by utilizing our global reach and superior routes to market to deliver 3Par's products to customers around the world. Together, we will accelerate our ability to offer unmatched levels of performance, efficiency and scalability to customers deploying cloud or scale-out environments, helping drive new growth for both companies."

Robison also added that his company's track record of buying and integrating businesses gives HP great confidence that this would be a successful combination.

HP has been on a major acquisition kick over the past year, buying Palm for $1.2 billion and 3Com for $2.7 billion and just announcing its intent to pick up security firm Fortify. The company has also been busy integrating computer services firm EDS, which it swallowed up in 2008 for $13.9 billion.

With an eye toward luring more customers to the cloud, HP is cutting staff and spending $1 billion to invest in additional data centers and beef up its Converged Infrastructure offering.

Update 9:32 a.m. PDT: In morning trading, 3Par shares were up better than 40 percent to around $25.70, HP shares were down about 2 percent to the vicinity of $39, and Dell was down about 1 percent to $11.94.