Dell Inks Deal For Compellent, Will Resell Compellent In Meantime

Dell Monday said it inked a definitive agreement to acquire Compellent, a move that would give it an enterprise-class storage offering and a built-in channel to sell it.

Dell also has entered into a reseller agreement with Compellent that will bring Compellent's storage technology to Dell's direct and indirect sales channels.

Dell plans to buy Compellent for about $27.75 per share, or a total of $960 million, if Compellent's cash on hand of about $140 million is included.

Dell and Compellent Thursday first unveiled their intention to merge at a price of $27.50 per share. That represents a significant discount, as Compellent share prices topped $34 per share early last week.

In addition to the new reseller agreement with Compellent, Dell is continuing to sell its own PowerVault lines and resell EMC products, said Brad Anderson, senior vice president of Dell's Enterprise Product Group.

Compellent will give Dell new ease-of-use and automated tiering capabilities to help customers increase their storage functionality and reduce storage costs, Anderson said.

"We are absolutely committed to the storage industry," he said.

Phil Soran, president, CEO and chairman of Compellent, is expected to take a vice president post at Dell post-acquisition. Soran said his company will bring more than 2,500 midsize enterprise, large enterprise and cloud customers, as well as 450 channel partners worldwide, to Dell.

For Compellent's channel partners, the acquisition by Dell will mean new opportunities as part of a larger company with a global distribution base than they would have had if Compellent remained independent, Soran said.

"The bottom line: The opportunity is bigger now, and we'll have more resources to drive the channel," he said.

Dell also signed retention agreements with all of Compellent's key executives and plans to offer jobs to all Compellent employees, Soran said.

Dell has not yet reached out to Compellent's channel partners, as the two are still being run as separate companies, Anderson said. However, Dell has told its channel partners to reach out to Compellent to start forming relationships, he added.

Compellent has reached out to its channel partners, who said they are excited about working with Dell, according to Soran.

"The majority say Dell has big opportunities for them," he said.

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Sonia St. Charles, CEO of the Davenport Group, a St. Paul, Minn.-based solution provider and partner of both Dell and Compellent, said working more closely with Dell on the Compellent product should provide new opportunities to do more with enterprise customers.

The biggest concern from customers is how well Dell will support them, St. Charles said. "Customers love Compellent's Copilot support," she said. "If Dell can continue with Copilot, it's a big positive. Dell has had a perception that its support is not good, whether it is or isn't."

It is hard to gauge the long-term impact to Compellent's channel partners of Dell's new reseller agreement or what it might mean for a new group of Dell solution providers to start selling the technology, St. Charles said.

"The proof is in the pudding," she said. "But for selling storage, it's not just like picking up another line. You need expertise. And once you have that expertise, you can pick up another line. But you need a lot of experience to sell more than one line. It will take some time before Compellent gets through Dell's marketing. But there will be some noise in the meantime."

St. Charles said she is not worried about Dell acquiring Compellent. "My staff is tired of hearing me say this, but in the midst of chaos there is a big business opportunity," she said. "It will take time to get this sorted out and for Dell to be ready to sell Compellent."