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Summary:

A few days after Dell offered to buy enterprise storage company 3PAR for $1.15 billion, Hewlett-Packard says it’s willing to pay up to $24 a share, or $1.6 billion. The bidding war is a sign that the time for enterprise cloud-styled storage is here to stay.

What’s with these storage buyouts? They almost always end up in bidding wars, dragging out the process forever. Not that it’s a problem for many of us in the media who like a good corporate fight to spice up the day. First it was the battle over Data Domain. Now it’s 3PAR.

Today, Hewlett-Packard took some time off from trying to duck the muck flying around in the wake of ex-CEO’s Mark Hurd’s ignominious exit to make a $1.6 billion dollar bid for Fremont, Calif.-based storage company, 3PAR.  That’s about $24 a share, in cash. As you might remember, last week Dell offered $1.15 billion to buyout the storage company. Apparently, HP was already in talks to buy 3PAR before Dell swooped in to buy the scalable storage provider’s business.

I know there are many reasons — some outlined by Gary Orenstein in his post, The Simple Reasons Dell Bought 3PAR — to argue for a 3PAR purchase, but I’d like to point out a few things that make this bid a little nuts. 3PAR is a company that grew a mere 5 percent last year. Even if it hits its target of growing revenue by 20 percent this year, it will still boast single digit margins.

As Gary said, 3PAR is the only decent competitor out there for EMC small enough to be snapped up. Both Dell and HP are essentially trying to figure out ways to compete with EMC, which is  apparently all set to announce a new mid-range unified storage offering soon that would aggressively push into HP territory.

Just when we thought storage industry was getting boring, the fireworks have returned.

Related Research from GigaOM Pro: Infrastructure Overview, Q2 2010

Transcript: HP Proposes to Acquire 3PAR Webcast

  1. Piyush Agarwal Monday, August 23, 2010

    I am not sure I understand these markets well, but why is BRCD not a player in this? Isn’t BRCD supposed to be strong in FC storage market? Would it be a fallback option for the loser (don’t think Dell would make that big a acquisition though). How about IBM?

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  2. [...] (See The Simple Reason Dell Bought 3PAR.) Yesterday, HP showed that even elephants can dance and jumped into the fray with a $1.6 billion bid, about one-third higher than Dell’s original $1.15 billion [...]

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  3. [...] makes more sense for HP to acquire the company. Dell first offered $1.15 billion for 3PAR and later HP countered with a $1.6 billion offer. its And now Dell is offering $1.6 billion net of 3PAR’s [...]

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