Dell to buy data storage firm Compellent for $960 million

Computer maker Dell yesterday revealed that it will acquire mid-range data storage firm Compellent Technologies, for $960 million in cash, the latest in the recent string of acquisitions of data storage companies in the US.

The acquisition comes after Dell lost out in September 2010 to Hewlett-Packard in an unprecedented 18-day bidding war for virtual data storage company 3PAR by paying a whopping premium of 348 per cent.  (See: HP knocks out Dell for 3PAR with $2.4-bn bid) 

According to Bloomberg data, there have been more than 50 similar acquisitions in the storage industry in the past 12 months, with an average premium of 15 per cent. 

The Dell-Compellent deal was expected since the computer maker had announced last week that it was in advanced talks to buy Compellent for $27.50 per share, valuing the Minnesota-based company at $876 million. (See: Dell in talks to buy data storage firm Compellent for $876 million

Dell's $960 million offer price is $84 million more than the $876 million it last week said it would pay. It has now offered to pay $27.75 per share in cash for a total equity value of approximately $960 million.

The bidding war for 3PAR in August-September had sent the stock prices of data storage companies in the US skyrocketing. The Compellent stock, which was quoting at $12.75 in July, shot up by 140 per cent in August 2010 and soared even higher last week to $33.65 on speculation that Dell was making a bid for Compellent.