NetApp claims victory in bidding for Data Domain

Jun 04, 2009 By JORDAN ROBERTSON , AP Technology Writer

(AP) -- NetApp Inc. has claimed victory over EMC Corp. in a bidding battle for Data Domain Inc., a company whose products help cut unnecessary data storage.

The showdown over a technology that seems an odd fit for both companies might not be over, though.

NetApp and Data Domain said Wednesday they reached a deal for Data Domain to be acquired for $1.9 billion in cash and stock. The announcement caps a two-week public battle for the maker of "de-duplication" machines, but doesn't mean the jostling is done. EMC could come back with another higher offer.

EMC said in a statement that it believes its $30-per-share offer is "superior" because it is all in cash.

An EMC spokesman didn't immediately return a message seeking further comment.

NetApp defended its offer.

"They seem to be saying that the battleground has moved from the dollar-per-share amount into the specifics of the terms of the offer, and we believe we offer better long-term value in our offer," Jay Kidd, NetApp's chief marketing officer, said in an interview.

Brian Marshall, an analyst with Broadpoint.AmTech, said he expects EMC to put up a higher bid out of a desire to keep Data Domain out of a rival's hands. He said he expects the price for Data Domain to go up to $33 to $35 per share.

"If I'm NetApp, I think it's a difficult proposition to win because EMC has substantially larger resources - it's my expectation EMC will probably win this war," he said. "EMC doesn't really need this company. I just think it's a defensive move; they don't want their closest competitor to have it."

EMC had cash and investments of $9.8 billion at the end of its latest quarter, which ended in March. NetApp had $2.6 billion in cash and short-term investments at the end of its latest quarter. EMC has a $25 billion market capitalization; NetApp's is $6 billion.

Both companies cited Data Domain's fast-growing revenue - the 8-year-old, 825-employee company's sales more than doubled last year to $274 million - as a reason for their interest.

Data Domain makes machines that flag files that a company has already stored, like copies of e-mails that went to multiple people, and prevents them from being stored again. The technology actually cuts down on the amount of storage a company needs to buy from companies like NetApp or EMC, which makes Santa Clara-based Data Domain a surprising takeover candidate for either company.

What NetApp sees in Data Domain, though, is the opportunity to take market share from EMC by offering the added de-duplication service, which helps companies lower their costs. Sunnyvale-based NetApp controls about 7 percent of the global market for external disk storage systems, while Hopkinton, Mass.-based EMC, the market leader, controls about 23 percent, according to the latest figures from market research firm IDC.

NetApp had originally offered $1.5 billion, or $25 per share in cash and stock, on May 20 before EMC swooped in with a higher offer of $30 per share. matched EMC's offer earlier Wednesday, then later announced that the companies had struck a deal at the higher price.

shares fell 14 cents to $32.40 in after-hours trading, after the acceptance of NetApp's revised proposal was announced. The stock had gained 96 cents, or 3 percent, to close at $32.54 during the regular trading session.

NetApp's stock rose 22 cents to $18.79 after-hours, after falling 77 cents, or 4 percent, to $18.57 in the regular session. EMC's stock was unchanged.

©2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Explore further: Facebook CEO wants more students to explore tech

add to favorites email to friend print save as pdf

Related Stories

EMC counters NetApp bid for Data Domain

Jun 01, 2009

US computer storage giant EMC Corp. offered 1.8 billion dollars on Monday for Data Domain in a bid to counter a rival offer for the data storage company from NetApp.

NetApp to buy Data Domain in $1.5 billion deal

May 21, 2009

(AP) -- Data storage company NetApp Inc. said Wednesday it agreed to buy data backup and disaster recovery systems provider Data Domain Inc. for $25 per share in cash and stock, or about $1.5 billion.

US files complaint against EMC

Mar 03, 2009

The US Justice Department announced that it has filed a complaint against EMC Corp. over contracts the information management and storage giant secured with the US government.

Microsoft feels more recession fallout, sales drop

Apr 23, 2009

(AP) -- Microsoft Corp. said Thursday its quarterly revenue fell from the previous year for the first time in its 23-year history as a public company, and its profit fell more sharply than Wall Street was ...

Networking: Storage-software sales soaring

Jul 25, 2005

Sales last quarter rose substantially at major developers of networking and storage software -- SAP, EMC and Microsoft, among others -- as companies purchase software to maintain the privacy of customer and patient records ...

Broadcom launches hostile $764M bid for Emulex

Apr 21, 2009

(AP) -- Chip designer Broadcom Corp. is launching a $764 million hostile takeover offer for network gear maker Emulex Corp. Broadcom said Tuesday the deal would help it develop new technologies for corporate data centers.

Recommended for you

Alibaba IPO to boost employee fortunes to $8 bn

40 minutes ago

Employees of Chinese e-commerce giant Alibaba will see their fortunes swell to nearly $8 billion as the company prepares a massive US stock offering that could be valued at $25 billion.

Alibaba mega IPO caps founder Jack Ma success tale

3 hours ago

When Jack Ma founded Alibaba 15 years ago he insisted the e-commerce venture should see itself as competing against Silicon Valley, not other Chinese companies. That bold ambition from a time when China was ...

Alibaba poised to surge on the NYSE

13 hours ago

Chinese e-commerce powerhouse Alibaba will say "open sesame" to the New York Stock Exchange on Friday, as its shares begin trading in a highly anticipated debut that could raise up to $25 billion.

User comments : 0