EMC Starts Storage Bidding War over Data Domain

By Chris Preimesberger  |  Posted 2009-06-01 Print this article Print

Dominant external disk storage company EMC tenders an offer of $1.8 billion in cash to acquire Data Domain, or 20 percent more than NetApp, which announced on May 20 a proposed $1.5 billion transaction involving both cash and stock.

EMC on June 1 dropped a surprise financial bomb on longtime competitor NetApp's $1.5 billion offer to acquire Data Domain. 

EMC, the world's largest external disk storage company, tendered an offer of $1.8 billion in cash, or 20 percent more than NetApp, which had announced May 20 a proposed transaction involving both cash and stock.

NetApp is attempting to acquire Data Domain for $25 per share of common stock. EMC is offering $30 per share.

EMC's all-cash proposal "is superior to the proposed NetApp transaction, providing Data Domain stockholders [with] greater value and certainty," EMC President, CEO and Chairman Joe Tucci said.

"Strategically, this combination will further enhance our ability to broaden EMC's best-in-class storage portfolio for the benefit of EMC and Data Domain customers, and this in turn will accelerate EMC's top-and bottom-line growth rates. Our proposal is a win-win for both companies," Tucci said.

"The combination of EMC and Data Domain technologies will strengthen EMC's leadership in the fast-growing and very important next-generation disk-based backup and archive market, and will also result in a business larger than a billion dollars for EMC in 2010."

Go here to read the full text of the letter from Tucci to Data Domain containing the offer. NetApp did not immediately have a response to the counteroffer.

Data Domain, based in Santa Clara, Calif., has 825 employees and reported income of $300 million in 2008. NetApp, with 7,645 employees and located in neighboring Sunnyvale, Calif., reported $3.59 billion in revenue in 2008.

All three companies in this financial drama are well known in the storage industry for their utilization of data deduplication features. Data deduplication eliminates redundant data from a disk storage device in order to lower storage space requirements, which in turn lowers data center power and cooling costs and lessens the amount of carbon dioxide produced to generate power to run the hardware.

A combination of NetApp and Data Domain would create the market's fifth-largest data storage company, ranking only behind EMC, Hewlett-Packard, IBM and Dell. EMC obviously does not want that merger to happen.

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on Salesforce.com and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and DevX.com and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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