3Par stock soars as HP-Dell bidding war intensifies
The bidding war between Hewlett-Packard Co. and Dell Inc. over a relatively small company, 3Par Inc., has intensified with HP’s latest bid of about $2 billion.
That’s probably not the final bid, but there’s already a clear winner: 3Par investors.
The Fremont company, which makes software used in the emerging technology of cloud computing, has seen its stock climb to $32.46 a share Friday, from $9.65 before the bidding started last week. That’s a jump of more than 236%.
“I’m in the money right now,” said 3Par stockholder Michael Mahdi of Mountain View, Calif. A self-identified day trader, he bought about 9,200 shares just after Dell made its first bid.
“It’s all icing on the cake,” Mahdi said. “I win either way, regardless of who buys them.”
The bidding started Aug. 16, with Dell offering $17 a share. HP followed, and it went back and forth. On Friday, Dell bid $27; three hours later, HP offered $30.
Meanwhile, shares of Dell and HP have not been faring so well. Between Aug. 16 and Friday, Dell stock slipped 0.6% and HP stock dropped 6.3%.
Hemant Hebbar, an analyst with Wedbush Securities, said that the two computer giants risk alienating their own shareholders if they keep pushing up the price for 3Par.
“The fact is that 3Par has good software, but it isn’t really a unique asset in the sense that they do have competition,” Hebbar said. “There are other companies out there that do what they do. So if you’re an investor in 3Par, you are likely enjoying this, but if you are an investor in Dell or HP, you might be scratching your head a bit.”
Last year 3Par brought in less than $200 million in sales. The company, founded in 1999, has never turned a profit.
But 3Par’s financial situation has little to do with why HP, the world’s largest PC firm, and Dell, the second-largest, are battling over it, said Kim Caughey, a tech analyst at Fort Pitt Capital Group, which owns shares in Dell.
“Time is money, and 3Par has software that works,” Caughey said. “The big question is, how much are these companies willing to pay to not have to take the time to develop the software that 3Par already has?”
Still, she thinks the bidding war will end soon.
“There is only so much a product is worth, and we’ve got to be coming close to that,” Caughey said.
Hebbar agreed. “I don’t think this could go to $2.5 billion or $3 billion or anything — it is very, very unlikely,” he said.
But Mahdi, hardly an uninterested party, remained hopeful.
“I think the cap would be somewhere around $2.6 billion,” he said. “For this to end, someone has to just come out with an outlandish offer that the other can’t match. Otherwise, the market will keep pushing.”
Dell shares rose 14 cents, or 1.2%, to $11.89 on Friday. HP shares slipped 22 cents, or 0.6%, to $38.