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Big, big data storage news happening: EMC has jumped into the ring to grab Data Domain to beat NetApp. News outlets are putting the all-cash offer by the storage titan between $1.8 billion and $2 billion. The move is making both EMC and Data Domain investors happy -- both stocks jumped by end of day trading Monday. According to EMC's press statement the offer represents a 20 percent premium to the cash and stock offer made by NetApp for Data Domain just two weeks ago when NetApp announced its intentions for the leading deduplication player and offered up $1.5 billion. At that time some news reports had the deal as sealed. But nothing is sealed until it's sealed, and it shouldn't come as a huge surprise to anyone covering the storage industry that EMC was watching NetApp's move like a hawk. CEO Joe Tucci is, without any doubt, one of the smartest acquisition business leaders and he doesn't like to lose. Yet one report actually quoted storage analysts as saying no other company could top NetApp's offer. Hello? How could anyone ever discount EMC from making a move like this? This is the company that bought up VMWare, and when its CEO wouldn't play nice and do things the ‘Tucci' way, it promptly escorted that leader out the door. It's the company that made a huge swoop into the small business storage arena last year in outbidding ExcelStor and paying $213 million for brand-name Iomega. And that deal was actually signed when EMC crashed the party. In fact EMC made 8 successful acquisitions last year. So no one should be surprised by this move, and while the blogsphere will reverberate today, it's going to happen as there is no legitimate reason for Data Domain to turn down such a lucrative offer.
Comments (8)
  written by Michael Eggebrecht, June 02, 2009
That's a pretty rich offer. I'm not sure that NetApp would want to -- or even could -- top that. Think there's any chance of a third bidder coming along?
 written by Matthew Quinn, June 02, 2009
Hard to imagine NetApp being able to keep up in the bidding. Like John pointed out, EMC is really flaunting its superior balance sheet with the offer.
Viewed in light of Oracle's deal for Sun -- where Oracle paid a 40+% premium for Sun and made its offer after IBM made a play -- cash-rich, low-debt tech companies are showing they're ready to open up their wallets for coveted targets. One thing is for sure, it's a good day to be a Data Domain shareholder.
 written by Judy Mottl, June 04, 2009
Wow, lucky I didn't bet my mortgage on my gut feeling NetApp wouldn't come back with an equal offer. But I think it might be the case of NetApp making EMC pay as much as it possibly can for Data Domain as there isn't a great deal of love between the two storage vendors.
 written by Bill Wilson, June 05, 2009
I think Data Domain really wants to join NetApp, a better fit with more growth potential in the stock..
written by Judy Mottl, June 05, 2009
So you don't think they're playing EMC against NetApp to get the best deal?
written by Judy Mottl, July 09, 2009
Well, I have to admit I do like saying I was right :) (it doesn't happen as often as I'd like.. lol). But news today is that EMC has Data Domain all wrapped up. Here's the lowdown at ITWire: http://www.itwire.com/content/view/26172/48/.
EMC just doesn't like to lose, and more importantly, it never seems to go for something it's not serious, and intent, on getting.
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Meanwhile, EMC has about $6 billion cash and just $3 billion in debt. The company also generates a sizeable amount of free cash each quarter ($684 million in Q1 of the year).
NetApp may have no choice but to up its offer for Data Domain. But since the initial offer was cash and stock, I'm not sure how high it can go without taking on debt, which would be pricey in this climate.
Of course, given EMC's balance sheet, Data Domain's management should be pushing for a sweetened bid. The stock is already trading about a buck and a half over the $30-per share offer price.