EMC has swooped in Monday with an $1.8 billion, or $30 a share, offer for Data Domain. The rub: Rival NetApp already had a plan to buy the company for $25 a share, or $1.5 billion.
EMC said its all cash offer is a 20 percent premium to NetApp's stock and cash offer May 20.
Simply put, EMC wants Data Domain to thwart NetApp's offer---or at the very least make the acquisition more expensive.
In a statement, EMC said:
EMC's all-cash proposal is superior to the proposed NetApp transaction providing Data Domain stockholders greater value and certainty. EMC's proposal is not subject to a financing or due diligence contingency, and the company will use existing cash balances to finance the transaction. EMC is promptly commencing a tender offer for all outstanding Data Domain common stock in order to expedite the timing of this transaction.
Joe Tucci, EMC's CEO, said his company's offer is a "superior proposal" and a "win-win." "This transaction is all about the growth of an emerging market opportunity," said Tucci on a conference call.
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. We expect the transaction with Data Domain to be accretive to EMC's 2010 non-GAAP diluted earnings per share.
On a conference call, Tucci said the Data Domain offer was about driving growth. Tucci said "we had our eye on Data Domain, but obviously someone got there first," but said the growth profile of the combined companies makes the higher price worth it. He made the following points:
- Data Domain would run as a product group with more R&D investment;
- EMC would leverage its sales channel for distribution and its services unit;
- Some synergy with real estate and back office savings, but the deal is about growth and accelerating next generation backup products.
- The combination of three products EMC's DL4000 and Avamar and Data Domain would be a $1 billion business.
Certainly, Data Domain shareholders were happy about the EMC offer: