EMC Extends Its All-Cash Offer in Data Domain Deal

 
 
By Chris Preimesberger  |  Posted 2009-06-26
 
 
 

EMC waited until the close of the business day June 26 to extend its $1.8 billion cash offer to snatch midrange storage provider Data Domain away from its original suitor, NetApp.

The world's largest external disk storage provider wants to purchase all outstanding shares of Data Domain common stock for $30 per share. NetApp's offer of $1.9 billion also is for $30 per share, but it is comprised of is a combination of cash and stock, and unpredictability of the latter is what EMC hopes will sway Data Domain shareholders to accept its unsolicited bid.

EMC said that its new offer will expire at midnight Eastern Daylight Time on July 10. The company's first offer of $1.8 billion in cash, made on June 2, was previously scheduled to expire on June 29.

"EMC's $30 per share all-cash offer remains superior to NetApp's stock and cash offer and, very importantly, delivers to Data Domain stockholders the price certainty and price protection its management team and board stated as important priorities during their negotiations with NetApp," President, CEO and Chairman Joe Tucci said.

"We continue to anticipate a routine review by the FTC resulting in a timely regulatory approval. We look forward to the execution of the definitive agreement and closing of the transaction with EMC."

NetApp's and Data Domain's board of directors already have unanimously approved the transaction between the two storage makers. Shareholders' votes are in the works.

NetApp issues statement

A NetApp spokesperson released a statement, attributed to no one person, shortly after EMC made its announcement June 26:

"NetApp continues to believe that its friendly merger agreement with Data Domain is superior to EMC's unsolicited offer, noting that the combination of NetApp and Data Domain offers compelling strategic rationale, attractive immediate and long-term value for stockholders and greater opportunity for Data Domain customers and employees. NetApp urges Data Domain stockholders to reject EMC's unsolicited offer and not tender their shares."

Interestingly, EMC created its own separate subsidiary, Envoy Merger Corp., for the specific purpose of landing this acquisition.

That should put to rest any doubts that EMC is serious about making the deal; some industry observers have suggested publicly that EMC simply wants to raise the cost of acquisition for NetApp, which is not as financially powerful as cash-rich EMC.

Editor's note: This story was updated and corrected to state that EMC did not inflate its offer to $1.9 billion.

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