REUTERS — 9:58 AM ET 08/27/10
By Ritsuko Ando and Soyoung Kim
NEW YORK (Reuters) - Hewlett-Packard Co raised its offer for 3PAR Inc to $2.0 billion, once again topping Dell Inc's bid and showing it had plenty of ammunition in the bidding war for the data storage company.
HP's offer of $30 per share came less than 3 hours after Dell announced 3PAR had accepted its bid of $27 per share, which matched HP's previous offer.
Dell's agreement with 3PAR allows it to match competing bids, but analysts say HP may be the stronger player with $115 billion in annual revenue compared with Dell's$53 billion.
3PAR shares surged 20 percent to $31.29 in early trade. The bidding war has raised 3PAR's valuations to what some analysts see as unreasonable levels. Dell's first public offer for 3PAR was $18 per share.
The rapidly escalating bids for 3PAR come as Dell, HP and other large technology vendors like International Business Machines Corp and Cisco Systems Inc have been expanding into new technologies to offer corporate clients a wider range of products and services.
3PAR specializes in high-end data storage, a key part of "cloud computing" -- an increasingly popular technology that enables computer users to access data and software over the Internet, allowing companies to cut costs.
August has been a particularly active month for deals. Intel Corp bid $7.7 billion for security software maker McAfee Inc last week.
But analysts say the bidding war over 3PAR has driven up valuations, raising the risk of the buyer overpaying.
Analysts say at current bids, 3PAR is valued at around eight times sales. Multiples above five are considered lofty in technology acquisitions.
3PAR has barely made a profit since its 1999 founding.
Some say, however, the company may be worth more than traditional metrics suggest, since it could grow exponentially with the massive sales channels of Dell or HP.
The bidding war, a rare occurrence in the tech sector, started earlier this week when HP bid $24 a share for 3PAR, topping Dell's$18-per-share deal.
(Reporting by Ritsuko Ando and Soyoung Kim; Additional reporting by Paritosh Bansal; Editing by Derek Caney and John Wallace)
