Hewlett-Packard is bidding $US1.5 billion ($A1.69 billion) for data storage provider 3Par, offering 33 per cent more than what rival Dell agreed to pay for the company just a week earlier.
The tussle for control of 3Par comes as both HP and Dell have been looking to expand beyond personal computers in search of bigger profits. The company they both want to buy provides products for organising data on corporate servers. Those tools could help either company go deeper into "cloud computing", the growing practice of offering software on a subscription basis over the internet.
Monday's offer raised questions about the direction HP is taking since chief executive Mark Hurd was forced to resign earlier this month. Hurd was pushed out for filing inaccurate expense reports for his dinners and other outings with a former HP marketing contractor.
Asked why HP made an offer for 3Par only after Dell jumped in last week with a bid for $US1.13 billion ($A1.27 billion), company executives declined to say exactly how long they had been considering the deal, or whether Hurd had favoured it.
HP executive vice-president Dave Donatelli indicated HP had made a previous offer, but would go only as far as saying: "We've been working on this deal for some time."
HP's bid of $US24 per share represents a 33 per cent increase over Dell's offer a week ago of $US18 per share, which itself had been an 87 per cent premium over the closing price at the time. Including debt, HP valued the deal at about $US1.6 billion ($A1.8 billion).
In midday trading on Monday, shares of 3Par jumped $US7.35, or 41 per cent, to $US25.39. The fact it's above HP's offer price suggests investors expect Dell to make a higher counteroffer.
HP shares slipped 87 cents, or 2.2 per cent, to $US38.98 in midday trading. Dell shares fell 20 cents, or 1.7 per cent, to $US11.87.
HP is the world's biggest computer maker, with Dell trailing at number two. But HP has gone further than Dell in stretching beyond the PC market. PC sales made up less than a third of HP's annual revenue of $US116 billion ($A131 billion) during the most recent fiscal year, while they account for more than half of revenue at Dell.
With the acquisition of 3Par, which is based in Fremont, California, HP would add to a data storage business that makes up about 13 per cent of its revenue.
The software 3Par offers is designed to maximise available space on data storage hardware - a cost-cutting step - by using a technique called "thin provisioning", by which extra capacity can be added as needed.
HP executives cast the acquisition as adding to the one-stop-shop it is building for customers across a broad set of technologies, including data storage, network equipment and servers. The most recent deal in that effort was HP's $US2.7 billion ($A3 billion) acquisition in April of 3Com Corp, which makes routers and switches that direct internet and other data traffic.
"Customers want to buy from fewer larger companies that they trust," Donatelli told analysts on a conference call.