Now it looks like the battle for 3PAR will turn into an old-fashioned 15-round bout between Hewlett-Packard and Dell. Neither 3PAR suitor backed down today, as they each made their fourth bid for 3PAR. At the end of the latest bidding round, HP’s had the highest offer of $33 per share or $2.35 billion. Still, Dell kept its right to match any bid for 3PAR.
3PAR today said that after it told Dell of its plans to terminate its merger agreement to accept HP’s previous offer of $30 or $2 billion, Dell raised its offer from $27 to $32 per share with a termination fee of $92 million. HP then raised its bid to $33 per share.
Dell’s offer was good enough to at least prevent 3PAR from terminating the Aug. 16 agreement between the two, and 3PAR’s board must continue to recommend its shareholders accept Dell’s latest offer. However, 3PAR immediately deemed HP’s $2.4 billion off a “superior proposal,” and gave Dell another three business days to respond.
There was a twist to Dell’s latest offer. It proposed a multi-year reseller deal with 3PAR that any acquirer must honor. 3PAR said the offer also included price fixing and other terms that its board determined unacceptable. 3PAR did not give details on the “other terms.”
3PAR’s stock price has more than tripled from $9.65 since Dell’s first offer on less than three weeks ago.
“The journey to the cloud begins here,” says the sign on the giant EMC booth at VMworld. But Virgina residents these days see EMC as more of an inhibitor of travel than an enabler of journeys.
The Virginia Information Technologies Agency fingered EMC as the culprit in a glitch that brought down systems across state agencies. The Virginia Department of Motor Vehicles was one of those agencies, causing the state to stop issuing driver licenses since last Thursday.
VITA has been updating its website with news on the problem, placing blame on its EMC DMX-3, which is part of EMC’s enterprise Symmetrix storage platform. EMC seemed shocked by the failure, at least according to the way VITA put it on its site:
”According to the manufacturer of the storage system, the events that led to the outage appear to be unprecedented. The manufacturer reports that the system and its underlying technology have an exemplary history of reliability, industry-leading data availability of more than 99.999% and no similar failure in one billion hours of run time.”
VITA said today that the faulty DMX-3 has been fixed and the agency is testing it, but driver licenses are not yet being processed. The failure impacted 26 of 89 state agencies, including core business functions of three agencies. The outage affected 13% of the state’s file servers, according to VITA.
This isn’t EMC’s first high-profile failure this year. Exchange hosting provider Intermedia blamed EMC for a hardware failure that interrupted service in April. Intermedia did not say which EMC storage system failed, or if that system also has a history of going a billion hours without run time.
BlueArc has used Ocarina Networks’ add-on primary dedupe product for archival data, but picked Albireo for primary data after Dell acquired Ocarina. BlueArc senior director of solutions marketing Ravi Chalaka said the vendor will license Permabit’s software and make it available for all of its NAS systems.
“We chose Permabit because we wanted zero impact on performance,” Chalaka said. “We saw Permabit could maintain high performance while reducing the amount of disk it writes to.”
Chalaka said BlueArc will ship primary dedupe sometime next year as a licensed feature with its NAS but no decision has been made on pricing. He said OEM partner Hitachi Data Systems has yet to commit to using Albireo on the BlueArc systems it re-brands.
“Clearly, primary deduplication is here to stay,” Chalaka said. “Around 70 percent to 80 percent of our customers expect to see it by the end of next year.”
Storage array vendors have been busy developing or buying primary data reduction technology. Besides the Dell-Ocarina deal, IBM acquired primary compression vendor Storwize, EMC launched block compression for primary data on its Clariion and Celerra storage systems and Hewlett-Packard said it would expand its StoreOnce backup dedupe to primary data. NetApp already ships deduplication for primary data on its FAS storage arrays.
Permabit CEO Tom Cook has claimed the dedupe provider will make many OEM announcements in the coming months for Albireo.
After a flurry of bids for 3PAR late last week, Hewlett-Packard and Dell took the weekend off but 3PAR had something to say about its fate.
3PAR Friday night issued a statement saying its board determined HP’s $30 per share $(2 billion total) offer made that morning was a superior proposal to Dell’s most recent offer, and it notified Dell that it would terminate its merger agreement after three business days. Dell still has the right to match the HP offer to extend the merger agreement.
Dell’s latest bid was $1.8 billion Friday morning, which HP promptly raised to $2 billion. That brought the number of bids last week to five from Dell and HP, and the $2 billion offer was the sixth for 3PAR in two weeks.
With HP’s latest offer representing a 211% premium to 3PAR’s stock price before Dell made its first offer of $1.15 billion Aug. 16, we don’t expect many more bids for 3PAR. The battle should be winding down, and we look forward to a winner emerging this week. It could happen by tomorrow if Dell declines to increase its bid.
The bids are coming in rapidly for 3 PAR. 3PAR barely had time to digest Dell’s $1.8 billion offer this morning before Hewlett-Packard raised its offer to $2 billion.
Storage Systems vendor 3PAR has now received four bids in two days and six in two weeks with Dell and HP making three offers apiece.
Dell disclosed this morning that it would match the $1.8 billion offer HP made Thursday evening. 3PAR was obligated to accept that offer under terms of its original agreement with Dell that gives Dell the right to match competing bids. Dell opened the bidding at $1.15 billion Aug. 16, and HP bid $1.6 billion on Monday. On Thursday morning, Dell raised HP’s bid by $20 million and HP countered with its $1.8 billion bid after the market closed.
3PAR’s board has accepted all of Dell’s offers and none of HP’s, which seems to indicate 3PAR management favors Dell. However, 3PAR has to accept any matching bid due to its original agreement with Dell. That agreement also allows 3PAR to negotiate with any company that makes a superior offer. That means HP – or another company – can win even if 3PAR management prefers Dell. 3PAR is legally bound to send any superior offers to its shareholders, who will ultimately pick the winner.
Hewlett-Packard didn’t wait long to counter Dell’s counter offer to buy 3PAR. HP made a new bid of $27 per share after the market closed today, an 11% improvement on Dell’s pre-market offer of $24.30 per share or just over $1.6 billion.
Dell started the bidding with a $1.15 billion offer Aug. 16, and HP offered $1.6 billion Monday.
3PAR accepted Dell’s offer this morning, but hasn’t responded to HP’s bid. Dell’s revised agreement today increased the termination fee to $72 million that 3PAR must pay Dell if it accepts another offer. The previous termination fee was $53.5 million. Like its first offer, HP’s new bid did not include a termination fee.
At least one financial analyst who follows the storage industry predicted HP’s latest bid will be the winner.
“We believe it is now less likely that Dell will return with a competitive bid for 3PAR and would reiterate our prior stance that we have believed that HP would ultimately win this bidding war,” Aaron Rakers of Stifel Nicolaus Equity Research wrote in a note issued after HP’s second offer.
Dell raised its offer for 3PAR today with a revised bid that is a mere $20 million more than Hewlett-Packard’s Monday offer of $1.6 billion.
Dell’s latest offer of $24.30 per share beats HP’s $24 per share. Dell’s first offer disclosed Aug. 16 was for $18 per share or $1.15 billion.
Dell also said 3PAR has accepted today’s offer and signed an amendment to their original agreement. The revised agreement increases the termination fee to $72 million that 3PAR must pay Dell if it accepts another offer. The previous termination fee was $53.5 million. HP’s offer to 3PAR did not include a termination fee.
After receiving HP’s offer Monday, 3PAR gave Dell three days to respond. That three-day window ended today. Now we await HP’s response to Dell’s revised bid.
According to financial analyst Aaron Rakers of Stifel Nicolaus Equity Research, Dell’s response was not surprising and he expects HP to raise the ante again.
“… this acquisition makes sense for Dell when thinking about the need to diversify deeper into the enterprise data center market,” Rakers wrote today in a note to clients. “As it relates to HP making a counter offer, our discussions led us to believe it is likely that HP will counter in this situation, given that they had an offer on the table for 3PAR prior to Dell’s original announcement, the 33% premium on [HP’s] original counter offer, availability of cash on hand, and the company’s desire to have a proprietary offering in the high-end storage market.”
You can expect Dell to respond by the end of this week to Hewlett-Packard’s unsolicited $1.6 billion bid to buy Dell acquisition target 3PAR.
3PAR gave Dell three days to make a counter offer following HP’s offer on Monday, according to the latest SEC filing by 3PAR.
3PAR’s filing confirmed that HP was Company B in its previous filing, and said HP’s offer probably fit the definition of a “superior proposal” to Dell’s under terms of 3PAR’s previous agreement with Dell. HP’s offer of $24 per share was 33% higher than Dell’s $18 per share bid, which would total $1.15 billion.
The filing said that after receiving HP’s offer Monday, 3PAR told Dell it would open its books for HP and discuss the latest offer. 3PAR’s filing emphasized its directors have not yet taken any action on HP’s proposal and “continues to unanimously recommend that 3PAR’s stockholders accept the offer by Dell.” You can expect that to change, of course, if Dell declines to make a counter offer.
The three-day window would expire Thursday, which means any Dell counter offer – or a refusal to make another offer – would likely be public by Friday morning.
Meanwhile, speculation continues about other possible bidders. RBC Capital Markets analyst Amit Daryanani raised the possibility of EMC getting involved as a defensive position against its long-time partner and recent competitor Dell.
“We would not be shocked to see a competitive bid from EMC (or by way of VMware) as a defensive move to primarily keep Dell out of the high-end, scale-out, SAN marketplace,” Daryanani wrote in a note to clients. “EMC would likely view a winning bid from Dell for 3PAR as most negative, as it would add a fourth, large competitor in the high-end SAN market. In addition, given Dell’s OEM/reseller relationship with EMC since October 2001, Dell has intimate knowledge of a large segment of EMC customer environments. Therefore, if Dell were successful in acquiring 3PAR, we believe EMC would likely scuttle its reseller/OEM relationship with Dell, as Dell would likely target EMC’s midrange and high-end enterprise storage customers’ environments with the 3PAR products.”
Daryanani said NetApp would probably find 3PAR too expensive to make a bid, and he doesn’t expect larger vendors such as IBM, Oracle, Hitachi Data Systems, Cisco, or Fujitsu to get involved. Some in the industry have speculated that Oracle was Company A in 3PAR’s previous filing. That was the company that showed some interest in an acquisition but declined to bid. Daryanani pointed to Oracle’s recent acquisition of Sun and Oracle CEO Larry Ellison’s heavy investment in private SAN vendor Pillar Data as reasons why Oracle is unlikely to bid on 3PAR.
Hewlett-Packard and Dell weren’t the only companies interested in buying 3PAR. A third company also discussed buying the storage array vendor, according to an SEC filing detailing negotiations leading to Dell’s $1.15 billion offer for 3PAR.
The document lists Dell, Company A and Company B as the interested parties. Company B made an offer July 23, and is apparently Hewlett Packard based on HP’s claim that Monday’s $1.6 billion offer was not its first for 3PAR. Company A first talked to 3PAR about a “commercial relationship” – likely an OEM deal — and asked to be contacted if 3PAR put itself up for sale. But after offers from Dell and Company B, Company A declined to bid. 3PAR also reached out to a Company C, but that company was not interested in a deal.
3PAR CEO Dave Scott first talked to Company A executives May 3. Scott then met with Michael Dell and Dell SVP of corporate strategy Dave Johnson May 7. Company B contacted Scott July 8 to discuss “a possible business combination” between the companies.
Company B made a non-disclosed non-binding offer to acquire 3PAR on July 23, and Dell made its first non-binding offer of $15 to $17 on July 30. 3PAR asked Dell for $18.25 per share on July 31 and Dell made its $18 per share offer the following day. Company B declined to make another bid, and 3PAR agreed on an exclusive negotiation period with Dell through Aug. 15. The two companies agreed on the $18 per share deal on Aug. 15, and made the deal public the following morning.
The filing also said Dell and 3PAR discussed a reseller agreement beginning late last year.
Dell has yet to say whether it will raise its bid to beat the counter offer of HP (or should we say Company B?)
Hewlett-Packard isn’t going to just let Dell walk away with 3PAR.
HP outbid Dell today for the thin provisioning storage pioneer. HP offered $24 per share in cash for a total of $1.6 billion, trumping Dell’s bid of $18 per share and $1.15 billion made public last week.
HP’s offer was approved by the board, and it hopes to close the deal by the end of the year. A letter from HP chief strategy and technology officer to 3PAR Dave Scott revealed that HP made a previous offer for 3PAR, which apparently was below Dell’s bid.
“We’ve been working on this deal for some time,” HP storage chief Dave Donatelli said today during a conference call with financial analysts. “It’s been part of an active M&A process.”
Donatelli also said he considered 3PAR’s product portfolio a fit for midrange customers, although 3PAR sold mostly into enterprises. That could mean HP doesn’t necessarily see 3PAR as a replacement for the XP enterprise system that it sells through an OEM deal with Hitachi, and it may end up replacing HP’s EVA line instead.
Dell has not yet responded, but the situation is now similar to the battle between EMC and NetApp for Data Domain last summer. NetApp made the first bid, EMC responded, and NetApp raised its bid slightly before EMC walked off with Data Domain for $2.1 billion. But while EMC is substantially larger than NetApp and was heavily favored in a bidding war, HP and Dell are more evenly matched.