Dell to buy Compellent for $960 million

Dell announced Monday it has agreed to purchase the data storage firm Compellent, the latest in a series of acquisitions by traditional hardware manufacturers seeking to expand their footprint in the market for cloud services.

Compellent provides remote data storage services for both the cloud and enterprise computing environments. Dell's offer of $27.50 a share was below Compellent's stock price of almost $34, causing the stock to plunge more than 13 percent during trading on Monday.

“Compellent is a natural complement to Dell’s expanding enterprise storage portfolio. The Compellent storage platform will enable Dell to provide customers additional mid- and high-end network storage solutions that simplify and reduce the cost of data management,” said Brad Anderson, senior vice president of Dell's enterprise product group.

The move comes just three months after rival Hewlett-Packard outbid Dell for the data storage firm 3PAR after a lengthy bidding war. The acquisition market for mid-size information technology services companies has been heating up since this summer, with more companies facing shrinking margins on hardware and increased competition from Asian firms.

“We are excited about our merger with Dell. This is the next logical step in our goal to scale our products, channel and team worldwide,” said Phil Soran, President, CEO and Chairman of Compellent. “With Dell’s scale and technology leadership, we accelerate the adoption of our virtualized platform, Fluid Data, to redefine the value of enterprise storage for data centers and cloud computing.”

Dell plans to keep Compellent's existing operations in Eden Prairie, Minn., and will invest to grow the business. Dell also signed a reseller agreement with Compellent that will allow them to offer the firm's storage portfolio to customers immediately.