August 27, 2010, 1:22 PM — The bidding war for storage vendor 3PAR continued to escalate Friday, with Hewlett-Packard submitting a new offer of $30 per share, or $2 billion. The offer topped a $27 per share bid made by Dell earlier in the day.
HP's board has approved the offer, but 3PAR's has not yet done so, according to an HP statement. 3PAR's board has accepted Dell's $27 per share bid, but the vendor would have to pay Dell a $72 million termination fee if it accepts a superior offer.
3PAR is known for its "thin provisioning" technology, which allows storage resources to be provided on demand. It differs from traditional "fat provisioning," which allocates an excess amount of storage to an application in anticipation of future needs. Thin provisioning is much more efficient than the latter approach, which leads to underutilization of resources, advocates say.
Both HP and Dell see 3PAR's products as a key asset for building cloud computing environments.
The competition for 3PAR has been intense since Dell's initial offer of $1.15 billion on Aug. 16. Analysts have chalked this up to the fact that there are few alternative, comparable acquisition targets.
Dell and 3Par could not immediately be reached for comment on HP's announcement.
The bidding war will likely continue, according to Forrester Research analyst Andrew Reichman.
"It's not like we're dealing with a couple of companies that have a really tight budget. It's really hard to say what the ceiling for this thing's going to be," he said.
The stakes are high for both companies but particularly Dell, which has already purchased "surrounding technologies" via the acquisitions of storage optimization provider Ocarina Networks and server provisioning vendor Scalent, he said.
"If they don't have an enterprise-class storage system, those are less valuable to them," he said. "They already bought the appetizers. Now they have to buy the entree."
HP sells similar technology, but through a partnership with Hitachi. Adding 3PAR would allow it to migrate those customers over, boosting margins.
However, HP's courtship of 3PAR could diminish the marketability of the Hitachi technology, according to Reichman said. HP has "kind of disparaged those products by saying they've needed [3PAR]," he said.
The bidding war's eventual loser has other acquisition options, such as NetApp or EMC, but those would be far more expensive deals and involve "intense" integration challenges, Reichman said.
Other bidders may yet emerge for 3PAR, such as Oracle, but Reichman believes that particular prospect is unlikely.