Dell (DELL) announced today that it raised its acquisition bid for 3PAR Inc. (PAR) to about $1.53 billion in cash, slightly topping an offer made by rival Hewlett-Packard Co. (HPQ) earlier this week.
Dell’s new offer of $24.30 a share is only 30 cents a share above HP’s bid, but well above its initial offer of $18 a share, or $1.15 billion, earlier this month. 3PAR’s board said in a statement on Thursday that it deemed Dell’s amended proposal “superior.”
HP now has to decide whether to raise again. Analysts believe HP would likely raise its bid and would have the advantage in an escalating bidding war.
Reuters: “Dell’s 30-cent-per-share increase showed the company’s limitations”, said Rodman & Renshaw analyst Ashok Kumar.
“Even though Dell has the balance sheet to step up the offer, they’re probably reaching the upper limits of what they can offer,” he said. “At the end of the day, Hewlett-Packard is in a better position to close the deal.”
HP has $115 billion in annual revenue compared to Dell’s $53 billion.
If H-P were to raise its bid above Dell’s $24.30, Dell could either revise its bid again or walk away and collect a $72 million break-up fee, which is bigger than the original amount of $53.5 million, based on its first $18 p/sh bid.
Dell said Thursday the latest deal is expected to be accretive to Dell non-GAAP earnings by its fiscal year 2012.
Shares of 3Par fell 77 cents, or 2.88 percent, to $25.99 at 2:12 p.m. ET in New York Stock Exchange trading. Dell advanced 1 cent, or 0.04 percent, to $11.79.
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