Dell may up 3Par bid; Winner's curse could follow

Summary:Dell reportedly plans to raise its bid for 3Par after Hewlett-Packard offered $1.6 billion for the storage firm. Will buyer's remorse follow the ultimate winner?

Dell reportedly plans to raise its bid for 3Par after Hewlett-Packard offered $1.6 billion for the storage firm.

On Monday, HP offered $24 a share for 3Par. On Aug. 16, Dell offered $18 a share. The real kicker is that 3Par closed at $9.58 on Aug. 13.

Reuters reported that the Dell offer was on deck. Fund managers surveyed by Reuters expected the final 3Par price to be about $29 a share.

What may emerge from this bidding war is a serious case of buyer's remorse. In bidding wars, there's a "winner's curse" where the victorious company overpays.

As previously noted, 3Par's financials don't back up the heady valuation. 3Par in its most recent quarter delivered revenue of $54.3 million with net income of $1.01 million. Those fiscal first quarter results met expectations.

For fiscal 2011, 3Par is expected to deliver revenue of $235.3 million, up from $194.3 million in fiscal 2010.

However, there's a dearth of storage companies left to acquire so Dell and HP are willing to pay up for 3Par.

Topics: Storage, Banking, Dell, Enterprise Software, Hardware

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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