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Dell faces 3PAR deadline; will EMC make a bid?

You can expect Dell to respond by the end of this week to Hewlett-Packard’s unsolicited $1.6 billion bid to buy Dell acquisition target 3PAR.

3PAR gave Dell three days to make a counter offer following HP’s offer on Monday, according to the latest SEC filing by 3PAR.

3PAR’s filing confirmed that HP was Company B in its previous filing, and said HP’s offer probably fit the definition of a “superior proposal” to Dell’s under terms of 3PAR’s previous agreement with Dell. HP’s offer of $24 per share was 33% higher than Dell’s $18 per share bid, which would total $1.15 billion.

The filing said that after receiving HP’s offer Monday, 3PAR told Dell it would open its books for HP and discuss the latest offer. 3PAR’s filing emphasized its directors have not yet taken any action on HP’s proposal and “continues to unanimously recommend that 3PAR’s stockholders accept the offer by Dell.” You can expect that to change, of course, if Dell declines to make a counter offer.

The three-day window would expire Thursday, which means any Dell counter offer – or a refusal to make another offer – would likely be public by Friday morning.

Meanwhile, speculation continues about other possible bidders. RBC Capital Markets analyst Amit Daryanani raised the possibility of EMC getting involved as a defensive position against its long-time partner and recent competitor Dell.

“We would not be shocked to see a competitive bid from EMC (or by way of VMware) as a defensive move to primarily keep Dell out of the high-end, scale-out, SAN marketplace,” Daryanani wrote in a note to clients. “EMC would likely view a winning bid from Dell for 3PAR as most negative, as it would add a fourth, large competitor in the high-end SAN market. In addition, given Dell’s OEM/reseller relationship with EMC since October 2001, Dell has intimate knowledge of a large segment of EMC customer environments. Therefore, if Dell were successful in acquiring 3PAR, we believe EMC would likely scuttle its reseller/OEM relationship with Dell, as Dell would likely target EMC’s midrange and high-end enterprise storage customers’ environments with the 3PAR products.”

Daryanani said NetApp would probably find 3PAR too expensive to make a bid, and he doesn’t expect larger vendors such as IBM, Oracle, Hitachi Data Systems, Cisco, or Fujitsu to get involved. Some in the industry have speculated that Oracle was Company A in 3PAR’s previous filing. That was the company that showed some interest in an acquisition but declined to bid. Daryanani pointed to Oracle’s recent acquisition of Sun and Oracle CEO Larry Ellison’s heavy investment in private SAN vendor Pillar Data as reasons why Oracle is unlikely to bid on 3PAR.

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