Dell said Thursday that 3PAR has accepted an enhanced $1.6 billion acquisition offer that matches the counteroffer Hewlett-Packard submitted on Aug. 23. Dell's initial bid for 3PAR was $1.15 billion.
Though HP could up the ante again, Dell noted that the acquisition agreement it signed with 3PAR on Aug. 16 includes a provision for matching competing bids. Moreover, if 3PAR accepts a competing offer, it will have to pay Dell a $72 million termination fee.
Thanks to its acquisition of EqualLogic in 2007, Dell already owns intellectual property for entry-level and mid-market storage deployments, noted IDC Vice President Benjamin Woo. "The addition of 3PAR would allow Dell to round out its storage portfolio by adding a high-end offering," Woo said.
Completing Dell's Strategy
Dell's other storage-technology acquisitions this year include Ocarina Networks and Scalent Networks. But Dell's strategy was incomplete without an enterprise-class primary storage system, observed Forrester Research Senior Analyst Andrew Reichman.
"3PAR, whose products generally compete with high-end systems in terms of performance and availability, will give Dell the ammunition they need to go head-to-head with the big guys," Reichman wrote in a blog.
IT organizations faced with ever-increasing storage requirements can deploy 3PAR's clustered storage architecture for multi-tenant cloud-computing environments. Though 3PAR is not yet profitable, Dell said it believes its global brand and customer reach will accelerate 3PAR's revenue growth.
"Dell has a demonstrated commitment and track record in integrating and growing acquired companies and nurturing their entrepreneurial and innovative cultures, as illustrated by the dramatic growth of the EqualLogic iSCSI storage business over the last three years," the company said.
Should HP decline to submit another bid, Dell's acquisition of 3PAR is expected to close before the end of the year. The goal is to offer Dell's customers a unified enterprise environment that includes all storage categories from direct attached storage to fibre channel, Dell executives said.
Dell's EMC Deal
In terms of the broader storage landscape, 3PAR represents one of the last remaining independent storage vendors, Reichman noted. "With the acquisitions of the last several years, the ranks are thin, with Compellent, Xiotech and Pillar on the smaller front, and EMC and NetApp representing the giants of the storage-focused arena," Reichman wrote.
Analysts have expressed concern that Dell's acquisition of 3PAR could have a negative impact on the company's storage partnership with EMC. "In the long run, Dell is likely to be motivated to move out of EMC's shadow and build its storage brand on proprietary products," Reichman wrote.
However, Dell CEO Michael Dell noted last week that about 80 percent of the Dell-EMC relationship fits into the lower end of the Clarion product line, for which the proposed Dell-3PAR deal would not have similar offerings.
"Certainly, there will be places where we choose to partner and places where we choose to compete," Dell said on a conference call with analysts. "But we also see with this proposed 3PAR acquisition a great opportunity to grow the high end of our storage portfolio."
Dell will still need to rely on EMC for existing customers who have made investments in the Clarion line, and for deduplication leveraging EMC's Data Domain product line, Woo observed. "Over time, however, the partnership with EMC will definitely be affected," Woo said.