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Dell Agrees to Buy Compellent for $960M

December 13, 2010 No Comments

NEW YORK (Dow Jones)–Dell Inc. (DELL) finalized an $820 million deal for Compellent Technologies Inc. (CML), boosting its storage portfolio as demand grows in the sector.

The deal marks the latest merger in the data-storage industry, which has been growing quickly on soaring demand for efficient ways to store and access mounting amounts of documents and media.

Investors had been waiting for Dell’s response to losing in September a high-profile bidding war against Hewlett-Packard Co. (HPQ) for another data-storage provider, 3Par. Compellent had long been mentioned as a potential target, causing shares to triple since August and eventually leading to the below-market offer.

Dell said last week it was in exclusive talks to buy the data-storage provider for $27.50 a share, an 18% discount to Compellent’s closing price the day before the news. At the time, people close to the transaction said the likely offer was agreed upon before a big rally by Compellent’s stock last week.

The final offer ended up coming in at $27.75 a share, or $820 million excluding Compellent’s cash. Including the cash, the deal is valued at $960 million.

Compellent’s shares recently slid 2.9% to $27.89 trading. Dell, meanwhile, slipped 2.5% to $13.55.

Dave Johnson, Dell senior vice president of corporate strategy, said on a conference call with analysts that the structure of the deal is different from Dell’s agreement with 3Par, which included matching rights. He added that the Compellent process was a “very friendly relationship during discussions relative to the transaction” and that the deal includes a “reasonable” break-up fee.

Analysts, meanwhile, said it is unlikely that another bidder will emerge for Compellent.

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