Dell’s enterprise strategy doesn’t depend on 3Par bid

Dell Inc. (NASDAQ: DELL ) may have lost out to Hewlett-Packard Co. (NYSE: HPQ ) in the bidding war for storage vendor 3Par earlier this month, but the computer maker wasn’t pained by the decision to walk away.

“At some point, winning is losing. You get [the company], but it’s way too expensive,” said Praveen Asthana, vice-president of strategy and technology at Dell’s enterprise solutions group, during an interview in Singapore.

Dell walked away from the bidding for 3Par on Sept. 2, after the company rejected Dell’s US$32 per share bid in favor of a $33 per share offer from Hewlett-Packard. The decision to not raise Dell’s offer was made because the company felt it wouldn’t make its money back on the deal at a higher price, Asthana said.

“It’s not a good use of shareholder money; I’d rather put it in the bank then spend that money and not get it back,” he said.

Whether HP overpaid to acquire 3Par remains to be seen. The concept of the winner’s curse — the economic equivalent of a Phyrric victory — describes the possible outcome when a company wins an auction or bidding war to acquire an asset. By offering to pay the highest price for 3Par, HP valued the company higher than Dell or other potential buyers but risked overpaying for the company.

The $33 per share offer that clinched the acquisition represented a premium of more than 300 percent over 3Par’s share price before the bidding war. Whether HP ends up with a case of the winner’s curse or it turns out that $33 per share was a reasonable price to pay for 3Par will depend on how much the acquisition helps boost HP’s future revenue. For Dell’s part, the company is looking past the bidding war for 3Par, saying the failed acquisition bid doesn’t hurt its long-term aspirations in the enterprise IT market.

“[3Par] was a good asset to have, we had good reasons to have it. We do have a Plan B, so it’s not as if we’re dead in the water,” Asthana said, declining to detail what that back-up plan entails.

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