NetApp, Data Domain ink revised deal; EMC says bid still superior
Updated: NetApp and Data Domain said late Wednesday that they have entered a $1.9 billion merger agreement.
Under the pact, Data Domain's board has approved NetApp's latest offer, worth $30 a share in cash and stock. NetApp earlier in the day upped its bid for NetApp to trump an EMC all-cash offer worth $1.8 billion. NetApp originally offered to buy Data Domain for $1.5 billion.
The details:
Data Domain stockholders will have a right to receive a cash amount of $16.45 plus shares of NetApp common stock equal to the exchange ratio for each Data Domain share. The exchange ratio is equal to (i) 0.7783 shares of NetApp common stock if the "Closing Average" (as defined in the Merger Agreement) is less than $17.41, (ii) 0.6370 shares of NetApp common stock if the Closing Average is greater than $21.27, and (iii) that fraction of a share of NetApp common stock equal to the quotient obtained by dividing $13.55 by the Closing Average, if the Closing Average is (A) less than or equal to $21.27 and (B) greater than or equal to $17.41. The closing average means the average of the closing sales prices for NetApp common stock as reported on the NASDAQ Global Select Market for the 10 most recent consecutive trading days ending on the third trading day immediately prior to the closing of the first-step merger.
That mumbo jumbo basically means that NetApp may have to adjust the cash portion depending on the fluctuation of its stock price.
EMC isn't pleased. In a statement, EMC CEO Joe Tucci said:
"EMC's all-cash tender offer remains superior to NetApp's proposed part-stock merger transaction. We are proceeding with our superior cash tender offer, which is not subject to any financing or due diligence contingency. We do not believe that the Data Domain stockholders will approve the merger transaction with NetApp."
Even though Data Domain approved the NetApp deal it said it was reviewing EMC's offer. The company requested that shareholders wait until Data Domain can can communicate with them before deciding on the EMC offer.