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By Matthew Quinn
Well, that didn't take long. NetApp formally entered into a bidding war with EMC for Data Domain, matching the $30 per share offer EMC made on Monday. And judging by the market's reaction to the news, higher bids are likely on the way for the maker of data deduplication service devices.
"Our strategic rationale remains the same and we firmly believe that the combination of our two companies will provide a greater opportunity and risk-adjusted value for Data Domain shareholders, customers, and partners," said Dan Warmenhoven, chairman and CEO of NetApp, in a press release.
Under the revised offer, Data Domain shareholders would receive $16.45 in cash for their shares and $13.55 per share in NetApp stock based on NetApp's closing share price on June 2, 2009 of $19.34. The new offer is $5 more in cash than the original proposal made on May 20. EMC's offer is all cash.
The news sent Data Domain's share price up nearly 5% in morning trading, going as high as $33.09, indicating investors fully expect EMC to up the ante. And, as my colleague John Goff pointed out in his comments on EMC's offer yesterday, EMC has a stronger balance sheet than NetApp to get into a bidding war.
In terms of who end users would like to see seal the deal, preliminary results from a survey being conducted by CIOZone Research Network found 70 respondents were decidedly split, with 49% preferring EMC and 51% leaning toward NetApp. The most commonly cited reason for choosing EMC was having an existing relationship. Those favoring NetApp often indicated they believed it would do a better job of integrating Data Domain.
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