Compellent sold for $960M

Less than a week after a preliminary deal was announced, Compellent Technologies of Eden Prairie was acquired Monday for a slightly sweetened cash offer of $960 million by Texas computer maker Dell in a deal that saved the jobs of all 490 Compellent employees. The firm has about 300 workers in the Twin Cities.

"Dell plans to keep our existing operations and grow them," both in Eden Prairie and other company locations, said Phil Soran, Compellent CEO. "We're giving employees offer letters to do same role and at same location as before."

In addition, he said, "we're going to keep hiring."

"It's definitely unusual" for an acquiring company to leave all jobs in place, said Eric Martinuzzi, an analyst at Craig-Hallum in Minneapolis. But Dell probably didn't want to interfere with Compellent's popular customer-support operations, he said. Several years ago, Dell got bad publicity for outsourcing technical support to other countries, often with poor results.

Dell raised its bid for Compellent by 25 cents a share from last week, to $27.75 a share. Martinuzzi said the increase probably reflected a closer examination of the amount of working capital on Compellent's balance sheet. Compellent is sitting on approximately $140 million in cash.

Dell had been rumored as a potential acquirer of Compellent since losing an August bidding war for storage firm 3Par to Hewlett-Packard.

The boards of directors of both companies have approved the deal, which is expected to close in February, said Brad Anderson, senior vice president of Dell's Enterprise Product Group, during a conference call with reporters.

The deal came four days after Dell and Compellent raised eyebrows by announcing a pending deal worth $876 million, or $27.50 a share. That was a discount to the $33.65 price of Compellent stock the day before the Thursday announcement.

But Soran told reporters the price represents a significant premium over where the stock has traded previously. As recently as August, Compellent stock had dipped below $12 a share. Between August and last week, the stock nearly tripled.

Compellent stock closed Monday at $27.98, down 73 cents.

For Soran, whose Compellent holdings will earn him $36.3 million, according to the most recent proxy filing, this is his second successful data storage start-up. He and two technologists started another Twin Cities storage firm, Xiotech, in 1995, then sold it to Seagate for $360 million at the height of the 2000 tech boom. Xiotech was spun off from Seagate in 2002.

These days, data storage firms are even more in demand. The Compellent deal follows the acquisition of more than half a dozen data storage firms in the last two years. That's a sign of how important storage has become because of an explosion in the amount of data that corporations must handle, Martinuzzi said.

"The data storage business has become strategically important," Martinuzzi said. "It used to be sleepy."

Steve Alexander • 612-673-4553