Dell is walking away from a bidding contest with rival Hewlett-Packard Co. for data-storage maker 3Par.
Dell said Thursday it won’t match HP’s offer to pay $33 per share for 3Par, or about $2.1 billion. Dell’s decision came barely an hour after 3Par announced it had received Dell’s revised offer of $32 per share and then the even stronger bid from HP.
The board of 3Par deemed HP’s offer superior. It’s 83 percent above Dell’s first offer and more than three times what 3Par stock was trading at then.
“We took a measured approach throughout the process and have decided to end these discussions,” said Dell’s Dave Johnson, a senior vice president.
Dell, which is based in Round Rock, made the first offer for 3Par on Aug. 16, at $18 per share. As part of an agreement between the two companies, Fremont, Calif.-based 3Par must pay Dell a $72 million termination fee.
Palo Alto, Calif.-based HP and Dell were looking at 3Par as a way to build up their data center and “cloud computing” businesses, delivering software, data storage and other services to customers over the Internet.
Both companies are racing to expand beyond the PC business, where profits are shrinking. Computer makers have been slashing prices to stay competitive, while the cost of LCD screens, memory and other parts has increased.
The hardware and consulting services that Dell, HP and others sell to big enterprises come with richer profits; now, technology providers see cloud computing as the next area of big growth and sweeter profits.
Increasingly, companies aren’t buying their own computer servers for certain tasks anymore. Instead, they’re paying to have software they would have stored on those machines delivered to them over the Internet.
Dell, HP and others are taking advantage of the nascent trend by offering cloud-computing services on a subscription basis and selling equipment and software to help customers build their own cloud systems.
Source:http://www.chron.com/disp/story.mpl/business/7184324.html
