After losing out on 3PAR to HP, Dell seems to have satisfied its storage fix by agreeing to buy Compellent Technologies. The deal, a result of talks that began last week, gives Dell a solid enterprise-class storage maker that can help bulk up Dell’s storage offering.
Dell said it will pay $27.75 per share in cash for each share of Compellent, for a total equity value of approximately $960 million. The deal, which has been approved by both boards, tops the $27.50 per share Dell originally offered last week, though is still below Compellent’s closing price of $28.71 on Friday. The transaction is expected to close early next year.
The move will allow Dell to expand its data center offering and will fill out Dell’s storage line-up, which is a weak spot in Dell’s business, as my colleague Derrick Harris noted last week. Dell already has EqualLogic, PowerVault and a partnership with EMC, though the relationship with EMC is expected to suffer as Dell will likely spend more of its efforts selling Compellent gear alongside its existing storage technology. Dell said the pick-up complements its current strategy of helping customers manage their data growth, reduce storage costs and dramatically simplify the management of their IT infrastructure.
The acquisition is also important for Dell’s profitability, which has been tied in the past to lower-margin computers. Dell announced in June that it planned to double its data center revenue to $30 billion by the end of fiscal 2014. Buying up components like Compellent should help Dell reach its target, and also help it remain competitive in the face of growth from rivals IBM and HP.
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Image courtesy of Matthew Field.