By Agency Reporter

Wednesday, 15 Dec 2010

NEW YORK: Dell Incorporated plans to buy data storage company, Compellent Technologies Incorporated for about $960m, to expand beyond PCs and catch up with rivals Hewlett-Packard Company and IBM in technologies like cloud computing.

According to a Reuters report on Tuesday, Dell and Compellent said last week they were negotiating a deal, the latest in a series of acquisitions by large technology firms trying to position themselves for an economic recovery and become ”one stop shops” for business technology.

Dell, which lost to HP three months ago in a bidding war for another storage firm, 3PAR, sweetened its cash offer for Compellent to $27.75 a share from its bid last week of $27.50 per share. Net of Compellent‘s cash, Dell said it will pay $820m.

The deal represents a 17 per cent discount from before last week‘s announcement of the talks, prior to which the shares had risen 90 per cent since late October when Reuters first reported a deal was being discussed.

Compellent shares were down three per cent, or 87 cents, at $27.84 on the New York Stock Exchange, nine cents above Dell‘s bid.

The deal comes as Dell, HP, and International Business Machines have all chased acquisitions in data storage over the past year.

Data storage plays a crucial role in cloud computing, the accessing of remote computing power and data over the Internet. Dell entered this market in 2008 with its purchase of EqualLogic.

Compellent specialises in storage and recovery of data for small and medium-sized businesses. Dell said it plans to keep Compellent‘s existing operations in Eden Prairie, Minnesota.

While lacking the scale of 3PAR, which targets large data centres, Compellent can help Dell build cloud computing systems for smaller firms, analysts said.

Dell sees the deal, expected to close in early 2011, adding to its adjusted earnings in fiscal year 2012, it said on Monday.

Dell and HP want to expand beyond hardware into a broader set of products and services, including software, to bolster margins.

Goldman Sachs said in a report on Sunday that Dell and HP were particularly vulnerable to the growing popularity of tablet computers. He recommended a ”sell” on Dell and HP while rating Apple Inc a ”buy”.

 

Source: Punch