December 9, 2010
Dell Offers $1 Billion For Data Storage Company
Dell Inc. has offered to buy data storage company Compellent Technologies for nearly $1 billion.
The computer maker said on Thursday that it is bidding $27.50 a share for Compellent, which is an 18 percent discount from Wednesday's closing Nasdaq price.
Dell, HP, EMC and IBM are all trying to dominate the storage market as they position themselves for an economic recovery.
The companies are all trying to become "one stop shops" for all their corporate clients' technology needs. Dell wants to expand beyond its consumer PC business in order to bolster its margins and profit from growth in new trends like "cloud computing."
Data storage plays a critical role in "cloud computing," which uses the Internet to provide computing power and data.
Compellent helps companies store and recover vast amounts of data and serves the mid-market data storage market.
A deal could help Dell's expertise in storage for small and medium businesses become more legitimate. Dell entered this market in 2008 after purchasing EqualLogic.
Dell and Compellent said there could be no assurance that they would reach a deal, but a source familiar with the situation told Reuters that both parties were pleased with the $27.50 price and did not expect another bidder.
Dell said it has reached an exclusive agreement with Compellent to negotiate a merger, and said that the talks were "advanced discussions."
The companies both said that they will not comment further until an agreement has been reached or discussions have ended.
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