3PAR accepts Dell’s $1.6B takeover offer, urges stockholders to accept

Update: HP Corp. has made a higher offer for 3PAR this evening, beating out the latest offer of $24.30 per share ($1.6-billion valuation)  from Dell. HP is offering $27 per share in an all cash deal, valuing 3PAR at $1.8-billion. HP says it has the capital to make the acquisition and it has already been approved by the board.

3Par Corporation has announced today they have agreed to Dell’s increased bid to acquire the company for $24.30 per share, valuing the acquisition price at $1.6-billion, net of cash.

The 3Par stock (NYSE:PAR) has traditionally traded with low variability, until August 16 when the price jumped from under $10 per share to $18 per share, and only five days later propelling up to $26 per share as a takeover agreement was imminent and the acquisition offers were considered fair going forward.

Under the tender offer deal, there is still a small likelihood that the acquisition could still fall through, as Dell has options to forego the acquisition, but the company would have to pay a $72-million termination fee as per the amended acquisition agreement that reflects the new bid price.

 The tender offer is set to expire at midnight (eastern time) on September 20 of this year.

Assuming the acquisition completes, also subject to regulatory approval, 3PAR would become a wholly owned subsidiary.

Dell will utilize 3PAR’s infrastructure to offer superior data storage as part of its cloud-based services.

David Johnson, the senior VP of corporate strategy at Dell said today in a statement, “With the 3PAR acquisition, Dell with have the broadest set of differentiated storage solutions in the market today.”

Today, the 3PAR stock (NYSE:3PAR) stock is trading down 2.43-percent to $26.11 per share, and that trend should continue downward closer to the acquisition price of $26.

The market has reacted positively to the news that the deal should go through, sending the Dell stock price (NASDAQ:DELL) trading up almost a percent to $11.86 per share as at about mid-day trading.

The board of 3PAR is recommending stockholders accept Dell’s tender offer.

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Hercules holds a B.Comm Finance from Ryerson University in Toronto, Canada. He is a Chartered Financial Analyst (CFA) level 3 candidate. He was previously a contributor at FiLife, a finance website owned by Dow Jones and IAC. Write to [email protected]
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