So it's official -- Dell (Nasdaq: DELL) really wants to buy Compellent Technologies (NYSE: CML) for less than the current market price.
The computing giant did sweeten its bid a little bit, placing the final offer at $27.75 per share. That's 0.9% above the previously reported $27.50 talking point, and Compellent still trades above Dell's purchase price.
At $820 million, net of Compellent's cash balance, this is a fairly large deal. You can pretty much rule out a competing bid from NetApp (Nasdaq: NTAP) because its $4.4 billion cash reserve and $1.3 billion in long-term debt don't add up to a strong negotiating position. There are no other mid-range storage specialists available to enter the race, and established industry giants EMC (NYSE: EMC) and Hewlett-Packard (NYSE: HPQ) are presumably busy integrating their own recent storage acquisitions.
So I don't see any bidding wars erupting over Compellent, no matter how attractive its data management software may be. The storage sector is quickly boiling down to a handful of large bullies named EMC, HP, IBM, and possibly Dell, with all the smaller fish apparently praying for their own turn at the buyout game. Compellent shareholders would be silly to reject this offer, because there ain't no better ones coming.
Other than Dell completing its lineup with Compellent and perhaps a smaller hardware minnow such as Xyratex (Nasdaq: XRTX), I can't imagine the recent buyout fever lingering for much longer. Well, perhaps one of the majors would like to lock up a steady supply of actual drives -- but Seagate Technology (Nasdaq: STX) already explored that avenue and came home empty-handed.
So I'm calling an end to the storage buyout binge after this one. Any new deals at this point will officially surprise me.
Do you agree with Anders' buyout cease-fire or do you see more deals coming down the pipeline? Share your insights in the comments below.
