As I expected, DELL walked away from the bidding war with HP to buy 3 PAR. HP actually did a very stupid thing by outbidding a non-approved offer by DELL, as analysts believed that HP should have waited more before to see DELL’s reaction on their latest bid. Anyway, this proves that HP really wanted to buy the company, and was not doing this in order to increase the costs on DELL (when buying 3 PAR), a company 25% its size by market capitalization.
I have stressed before that DELL is definitely not the strongest of the two, and if HP really wanted the company, then there’s no way DELL would be getting it. DELL’s upper limit (according to my calculation when the bidding war started) was $36, and after that DELL had to get out, or face dire consequences.
In all honesty, HP was a real sucker in this deal, as DELL made them swallow a company with a negative EPS (-5 cents) for a very inflated price. The company is not probably not worth even 25% of the amount paid (in the current market), not matter how you want to see it.
Both DELL, and HPQ are rebounding after the deal is closed, but that doesn’t mean anything, because the whole market is generally bullish this week. I expect HP to suffer in the medium term from buying this company.
I feel bad for those who bought this morning at $33.60, just before DELL announced that is no longer interested in buying 3 PAR. But then, the stock was very risky above the $30 level. Some investors were betting that this bidding war would continue forever.