The battle for 3PAR, a provider of information storage systems and software for cloud computing environments, is heating up. On August 16th, Dell (DELL), a leading global computer systems and service company, offered to acquire 3PAR for $18.00 a share in cash, in a transaction valued at $1.15 billion.

Just one week later, Hewlett-Packard (HPQ - Free Analyst Report), the world’s largest information technology company, topped Dell's bid with its plans to launch a $24.00-a-share cash tender offer for 3PAR upon approval by the data storage company's board of directors. H-P's offer is worth $1.6 billion, a third larger than Dell's.

H-P says its proposal is not subject to any financing contingency and has been approved by its board of directors. It expects the transaction to close by the end of the 2010 calendar year. And the company doesn't expect the deal to result in any material dilution to its earnings in spite of the hefty offer price, at over eight times 3PAR's revenue in the fiscal year that ended March 31st. H-P believes 3PAR aligns well with its ``converged infrastructure'' strategy, its ability to bring together server, storage, and networking technology to offer customers unified solutions to their problems.

The IT giants, including companies like IBM (IBM - Free Analyst Report) in addition to H-P and Dell, continue to take aim at expanding their technology services capabilities, with cloud computing and data storage in heightened focus.

At this juncture, we don't yet know whether Dell will increase its offer or if 3PAR's board will okay H-P's bid, and we have not factored 3PAR into either company's earnings. The shares of both Dell and Hewlett-Packard are trading near the low ends of their 52-week ranges and may reward patient investors with decent 3- to 5-year price recovery potential.