HP Raises 3Par Bid To $2 Billion

Who Should Hewlett-Packard Buy?

HP's executive vice president Dave Donatelli is leading HP's fight to snatch 3PAR from the clutches of Dell. In HP's latest bid Friday, HP jumped its bid to $30 a share, or an enterprise value of $2 billion, placing the ball back in Dell's court again to decide whether it wants to make another counter bid. On Thursday, HP raised the its bid from $24 to $27, topping Dell, but the Round Rock Texas company raised its offer early Friday, prompting HP's latest escalation. Ever since Dell began the public auction for 3PAR last week with an $18 a share bid, HP and Dell have waged a fierce battle for the small storage firm with coveted cloud computing expertise.

Dell would seem to have a home court advantage, because it has rights to match any HP offer within three days. Thus, Dell has until next week to match the latest HP offer. HP's leadership is interesting, because its former chief executive Mark Hurd left the firm just days before the bidding for 3PAR began. HP said Hurd was informed of the firm's interest in 3PAR before he left. Donatelli, who had left a top post at storage colossus EMC in 2009, was restricted by a Massachusetts court ruling in late May of 2009 from participating in any of HP's storage activities for a year. Now that the restriction has been lifeted, Donatelli has jumped into the fray with a vengeance and it appears his absence from storage activities didn't cause him to miss a beat.

As HP made its latest counter bid for 3PAR late Thursday, Donatelli said HP "remains uniquely positioned to execute on this combination," according to media reports. Both firms have substantial cash war chests to drag out the bidding for days or even weeks, if they choose.

A pattern has been set: Dell makes a bid, HP trumps it and Dell counters it and so forth and so on. Dell has another advantage -- it can collect a termination fee of more than 4% of the total deal if it loses 3PAR to HP. If HP wins 3PAR in its latest bid, there could be three winners: 3PAR stockholders would get a more than 200% premium on the firm's stock price before the start of the bidding; HP would get 3PAR, and Dell would get at a total of at least 4% of the final price now some $2 billion. As things stand now, Dell has three days to review HP's latest offer.

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Who Should Hewlett-Packard Buy?