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Checkmate for HP as Dell Increases Bid for 3PAR

Thursday, 26 Aug 2010 | 2:42 PM ET

Dell decided to play and increased its bid for 3PAR by $6.30 a share from its original $18.00 a share bid on Thursday.

It needed to do that to top a bid of $24.00 a share in cash for 3PAR from Hewlett Packard, received last week. The clock was ticking on Dell with some question as to whether they would continue to compete for 3PAR.

$24.30 a share or $1.6 billion is the new number from Dell. If Hewlett Packard comes back, Dell has the right to continue to match. The question is: will HP choose to compete?

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This is a contested situation where you want to maintain being the superior bid, if you will. Dell is clearly saying that 3PAR is a strategic asset for the company.

The battle for 3PAR is driven by its cloud-based storage applications, which enable IT organizations to deliver software and hardware as a service, offering a storage infrastructure platform for highly-virtualized data centers and cloud computing.

This new bid by Dell reflects an amended termination fee or break up fee of $72 million, which is payable in the event that 3PAR receives and accepts another unsolicited acquisition proposal that its board determines to be superior to Dell's increased offer.

How, if at all, does the uncertainty in the HP executive suite play into this? The company doesn't have a permanent CEO since Mark Hurd's scandal. So far it doesn't appear to affect their decision making. In fact, they've got an executive in charge of this particular area of bidding. (More about Hurd's departure and severance pay here)

Also, if Hewlett Packard chooses to come back and compete, can they make a bid that forces the board of 3PAR to tell Dell that they don’t any longer have these perpetual matching rights (every time Hewlett comes up on their bid price, Dell can position to match) or at least you have to come back and finish this up?

One has to imagine that Hewlett Packard knew Dell would probably compete and most likely does have another bid in its pocket.

More from The Faber Report:

thefaberreport.cnbc.comand now on Twitter @DAVIDFABER_CNBC


Questions? Comments? Write to faberreport@cnbc.com.

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