A tug-of-war intensified yesterday between America's top two computer makers, Dell and Hewlett-Packard, as the pair of hardware titans outbid each other in a billion dollar takeover fight for a hitherto obscure data storage firm, 3Par.
Early on Thursday, Texas-based Dell slapped down an improved offer of $1.52bn for 3Par, topping a $1.5bn proposal tabled by HP three days earlier. But HP struck back after the close of markets on Wall Street, raising its bid to $1.6bn.
The unusually aggressive head-to-head confrontation comes as the computer manufacturers jostle for position in the potentially lucrative market for so-called "cloud computing".
3Par, which is based near San Francisco, offers flexible data storage solutions to companies that do not want to invest capital in owning their own servers. It is considered well placed to benefit from higher information technology spending when the corporate world eventually stages a recovery from the recession.
HP's latest offer for 3Par is pitched at $27 per share, a significant premium on Dell's bid of $24.30. The auction began last week when Dell offered $18 in a deal initially accepted by 3Par's board. Financiers expressed surprise at the rapid upward march of the price.
"It's a very rich valuation," said Jeffrey Fidacaro, an analyst at Susquehanna Financial Group. "At what point does someone cry uncle? It's difficult because valuations don't seem to be making a whole lot of sense here. But then again, we don't know the revenue synergies they expect out of this."
3Par has 670 staff but has lost money for much of its 11-year history. Admirers say it could cash in from a trend where organisations shift away from spending money on their own server hardware to having technology resources delivered over the internet by third-party suppliers according to need – known as "cloud computing".
Toan Tran, a technology analyst at research firm Morningstar, said HP, the bigger of the two bidders, could be the hungrier: "At the end of the day, 3Par is worth more to HP than it is to Dell, given HP's existing enterprise hardware and services business."
HP splashed out $13.9bn two years ago on Electronic Data Systems, bolstering its presence in business IT services. But it is hobbled by a lack of a permanent chief executive: its boss, Mark Hurd, was forced out earlier this month in a scandal over allegations of sexual harassment and improper expense claims.
