Dell, the world's third-largest computer maker,  raised its offer for virtual data storage company 3PAR, matching its larger rival Hewlett-Packard's $1.8 billion offer.

Dell said today that 3PAR has accepted its increased offer of $27 per share in cash, or approximately $1.8 billion, net of 3PAR's cash.

The new Dell-3PAR accord was reached under a provision in the existing agreement between the companies that allows Dell to match competing bids.

Dell said in a statement that it continues to believe that the acquisition of 3PAR, with its industry-leading storage technology, is important to its customers and will enhance its position in utility-storage solutions.

Dell also believes that its global brand and broad global reach will dramatically accelerate 3PAR's revenue growth.

The latest bid hike by Dell shows the strategic importance of the last independent data storage company in the US to computer companies.

Yesterday, Dell had raised its 16 August offer of $18 per share or $1.13 billion for 3PAR to $24.30 a share amounting to $1.6 billion and announced that 3PAR had accepted its increased offer. (See: Dell escalate bidding war with HP for 3Par with $1.6-bn bid)

3PAR not only accepted Dell's $24.30-a-share offer, but agreed to a raised termination fee of $72 million from the earlier $53.5 million.
Within a few hours HP struck back topping Dell's latest offer by 11 per cent to $27 a share or $1.8 billion. (See: HP again trumps Dell's bid for 3PAR to $1.8 billion) 

With the current bids  strching the 3PAR's valuation to around eight times its expected fiscal 2011 sales, analysts wonder whether this will be the end of the bidding war.

The battle to acquire the 11 year-old company started by a group of server-cluster engineers from Sun MicroSystems has seen 3PAR's stock shoot up by nearly three times since Dell made the first move for the little-known data-storage company just 10 days ago.
3PAR was at $28.50 during today's pre-market trading.

Prior to Dell's initial bid, 3PAR was trading at around $10 per share and according to some analyst's, Dell's first offer of $18 per 3PAR share itself was too high as the company has barely made a profit since it was founded in 1999.

For 2009, 3PAR reported revenues of just $194 million, which is less than 1 per cent of the 2009 revenues of either HP or Dell.

Dell's 2009 revenue was $52.9 billion and $15.5 billion in second quarter 2010, while HP's revenue for 2009 was $114.2 billion and $30.7 billion in second quarter 2010.

Although Dell's revenue is half of HP, it nearly matches its bigger rival in cash hoard. Dell is reported to have around $12.4 billion in cash and short-term investments, while HP had $14.7 billion.

The reason that both companies are not willing to let go of 3PAR because is because it is the only independent data storage company in the market and the type of products it sells are critical to large corporations like banks, government bodies, etc.