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Dell bids $876m to acquire Compellent

Microscope contributor

Dell is locked in negotiations to acquire data storage player Compellent and has tabled an $876m bid but industry sources have questioned the logic.

Today's confirmation ends weeks of speculation about the pair and comes months after Dell lost a bidding war with HP over 3Par.

"Dell and Compellent have entered into an exclusivity agreement to negotiate a merger agreement in which Dell would acquire all the outstanding common stock of Compellent at a price of $27.50 per share in cash," the firms said in a statement. 

"There can be no assurance that an agreement will be reached or that a transaction will be consummated," the duo added.

Compellent makes virtualised modular storage arrays that fit into any environment, it offers one type of building block and management software and allows users to start small and scale without needing to perform fork lift upgrades.

However, market watchers have questioned how the technology squares with the portfolio sold by EqualLogic.

"3Par was relatively high-end and EqualLogic was modular, they had two different management suites but the deal made sense. Compellent is mid range as well so how does that fit? The hole Dell needs to fill is in the data centre," said one analyst.

In the nine months to 30 September, Compellent revenues were $110.4m, up 24% on the same period a year earlier, with the majority of revenues generated in the US.

Both Dell and Compellent do not intend to comment on the acquisition further until it has been finalised.

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