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Comdisco agrees to sell division to HP

Comdisco has formally accepted Hewlett-Packard's $750m (£514m) offer to buy its disaster recovery services business, despite a rival $825m bid from SunGard Data Systems.

However, not everyone thinks HP's offer is a good one.

"We think the value of this business is $1bn, no matter how you slice it up," said Christopher Field, a founder of distressed capital management firm Water Tower Capital and a financial advisor to Comdisco's equity committee.

Field called HP's bid a "fire sale price", claiming that it came in after the close of the bankruptcy auction for the Comdisco division, which makes the offer invalid.

"SunGard would be getting a favourable price at $850m. We will vigorously oppose the deal at this price," he said.

HP's $750m offer earned the immediate approval of Comdisco's creditors, but not the approval of its equity committee.

The equity committee does not want to leave money on the table, Field said. Although HP may be entitled to a deal cancellation charge of $25m, there would still be an extra $50m with a SunGard sale.

Comdisco is in the middle of bankruptcy reorganisation. The company is also in the centre of a battle between HP, SunGard and the US Department of Justice (DOJ) over its disaster recovery business.

HP and SunGard have fought to acquire the division, but the DOJ opposes the SunGard bid on antitrust grounds. The US Bankruptcy Court for the Northern District of Illinois postponed a ruling on the proposed sale of Comdisco's Availability Solutions business, after the DOJ filed a civil lawsuit to block a SunGard offer.

SunGard, Comdisco and IBM own a combined 80% of the disaster recovery market, according to research from analyst firm Dataquest.

The $75m difference between the two offers is the premium paid for fighting the DOJ lawsuit, Field said. Comdisco's creditors see the lawsuit as a new risk factor, and want the more immediate payoff.

The sale is subject to approval by the bankruptcy court at a hearing scheduled for 7 November. SunGard said last week it intends to fight the DOJ antitrust opposition, although a hearing was scheduled for 15 November.

SunGard declined to comment on the agreement between Comdisco and HP, or on the court date schedule. The DOJ was not immediately available for comment.

"Whatever happens is going to be litigated by either side," Field said. "I can't believe the estate can't wait a week to see if it can get an extra $50m."

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