The bidding war for the acquisition of Data Domain, a vendor of deduplication storage systems escalated yesterday, when NetApp increased its offer after EMC Corp made a $30 a share in cash and stock offer to the storage company.
NetApp and Data Domain announced yesterday that they have entered into a revised acquisition agreement under which NetApp will acquire all of the outstanding shares of Data Domain common stock for $30 per share in cash and stock in a transaction valued at approximately $1.9 billion, net of Data Domain's cash.
The Hopkinton, Massachusetts-based and Fortune 500 company, EMC Corp, a provider of information infrastructure systems, software and services said that its all-cash 1 June offer to acquire all of the outstanding common stock of Data Domain, for $30 per share is superior to the part-stock counter offer for Data Domain made by NetApp yesterday.
On 20 May, the Sunnyvale, California- based NetApp proposed to acquire all of the outstanding shares of Santa Clara, California-based Data Domain common stock for $25 per share in cash and stock. The transaction had valued Data Domain at approximately $1.5 billion of the company's net cash.
On 1 June, EMC Corp, rivaled and upped the stakes by offering $30 per share in cash, valuing Data Domain at approximately $1.8 billion, net of Data Domain's cash.
EMC's all-cash offer represented a 20-per cent premium to the cash and stock offer made by NetApp for Data Domain on 20 May 2009.
Yesterday, NetApp made a revised offer to Data Domain to buy its common stock for $30 per share in cash and stock in a transaction valued at approximately $1.9 billion, net of Data Domain's cash.
EMC Corp hit back yesterday by saying that its all-cash offer made on 1 June to acquire all of the outstanding common stock of Data Domain, for $30 per share is superior to the part-stock counter offer for Data Domain made by NetApp again yesterday.
Joe Tucci, EMC Chairman, President and CEO, said, ''EMC's all-cash tender offer remains superior to NetApp's proposed part-stock merger transaction. We are proceeding with our superior cash tender offer, which is not subject to any financing or due diligence contingency. We do not believe that the Data Domain stockholders will approve the merger transaction with NetApp.''
Both NetApp and EMC Corp want to expand their customer base in the data-center market through the acquisition of Data Domain, which is an up-coming new entrant in the storage market with 2008 sales at $274 million and having 777 employees.
Analysts feel that with the keenness shown by both companies to acquire Data Domain, the offer may go up by another $5 a share even though the Worldwide external controller-based disk storage market declined 11.1 per cent in the first quarter of 2009, according to research firm Gartner.
In the bidding war, EMC is more stronger and bigger than NettApp since it has a sizeable war chest in billions of dollars.
EMC is the global leader in external controller-based (ECB) disk storage and its revenue was $879.7 million with a market share of 23.2 per cent in the first quarter 2009 while NetApp's revenue was $324 million and market share was 8.5 per cent.
After making the revised bid, Dan Warmenhoven, chairman and CEO of NetApp said, "We are excited about this great opportunity for NetApp and Data Domain, the synergies between our two companies will enable us to accelerate growth and market adoption more so than as separate entities. This partnership will create meaningful benefits for our global customers."