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HP Bids $1.6 Billion For 3PAR, Leapfrogs Dell

3PAR is suddenly the most desired company in IT: HP has trumped Dell's bid for the cloud computing storage company, offering $24 per share, or $1.6 billion. Dell last week put in an offer of $18 per share, or $1.15 billion. Dell's bid represented an 87 percent premium on 3PAR's previous closing stock price. HP's offer Monday jumped the price another 40 percent. The bid is a sign HP remains strategically active despite the resignation of CEO Mark Hurd earlier this month. CFO Cathie Lesjak is serving as acting CEO until a fulltime replacement is found.

Why is 3PAR so attractive? Its expertise in cloud computing is one reason, of course, but the firm's thin provisioning approach, which treats storage as a utility is also popular among IT users. 3PAR uses a multi-tenant clustered storage architecture, which helps IT organizations build virtualized infrastructures. 3PAR has long maintained that its thin provisioning approach enables customers to better predict performance as they face storage capacity requirements that always seem to be increasing.

In making its "Superior Proposal" bid, HP said its offer has been approved by its board of directors and is not subject to any additional internal approvals. "There are unparalleled strategic benefits to be gained by combining the two organizations," said Shane Robison, HP's executive vice president and chief strategy and technology officer, in a letter to 3PAR management. "HP is uniquely positioned to capitalize on 3PAR's next-generation storage technology by utilizing our global reach and superior routes to market to deliver 3PAR's products to customer around the world."

Dell said it was attracted to 3PAR's thin provisioning and virtualization technologies, which it indicated overcome the limitations of traditional modular and monolithic arrays. "3PAR addresses the problem of costly, complex, and rigid IT environments and enables organizations to treat storage as a utility," said Dell in a release when it announced its plans to buy the company, adding that customers need to pay only for "the capacity and performance they need, and only when they use it."

HP's offer also involves Dave Donatelli, general manager of HP's enterprise servers, storage and networking unit. Donatelli is a former high-ranking executive at EMC. When Donatelli left EMC amid poaching recriminations, he was isolated from carrying out storage activities at HP, but his time in the penalty box is over and he is back in storage with a vengeance. HP said it hopes to close a deal with 3PAR by the end of the year. HP has increasingly been adding storage as it competes more aggressively in data centers with Cisco and Cisco's main storage partner, EMC. Last week, 3PAR's chief executive David Scott said a 3PAR-Dell partnership would be a good fit, because Dell's distribution network would complement 3PAR's storage solutions. For more insight on the bidding war, see Howard Marks' blog post here.