Dell eyes Compellent merger, 'advanced discussions' underway

Dell, which lost a bid to acquire 3Par to Hewlett-Packard, is in advanced talks to purchase Compellent Technologies, a key storage player.

Dell, which lost a bid to acquire 3Par to Hewlett-Packard, is in advanced talks to purchase Compellent Technologies, a key storage player. In a statement, Dell and Compellent said they are in "advanced discussions regarding a possible business combination involving the two companies."

The problem: Dell and Compellent are talking about a price of $27.50 in cash for each share of the storage company. Compellent shares closed at $33.65 on Wednesday.

If you bought Compellent shares above $30 hoping for a buyout, you're not too happy right now.

Dell and Compellent said there are no assurances that a deal will be reached. Given the gap between the price in the statement and Compellent shares, it's clear Dell is going to have to come up in price.

This time, Dell may not be able to avoid paying up for Compellent. Dell needs to bolster its storage business and is running out of acquisition targets. Dell is currently No. 5 in storage.

On Nov. 30, Dell CFO Brian Gladden was asked about the storage plan without 3Par. Gladden was also asked about the key relationship with EMC. Gladden said:

I think it's going to be a series of things. And then the reality is that we've got a great platform with EqualLogic that's very important for us. We've got a great organic business, PowerVault, that we've built over time. And those businesses generate good profitability for us and are very important as a base to that business.

As we look to expand, we'll continue to add IP to that portfolio and build on that platform. And we'll continue to build--we need to continue to have a broad set of relationships that allow us to have broader offerings there.

So the EMC relationship's been a very long and very important and successful relationship for us. And we're at a point now where we're spending a lot of time talking to them about where that goes next and how do we make it more successful for both of us? And that's the path we're headed down right now, and it's going to be a mix of those things that I think drives our storage success.

I think there is--clearly, there are a lot of moving pieces around storage right now, and the industry continues to consolidate, and there are opportunities for us to participate in that, and there are also opportunities for us to leverage the existing relationships and capabilities we have.

One of those opportunities for Dell is now Compellent.

Related: Dell walks away: HP wins 3Par for $2.4 billion

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