NetApp to review counteroffer for Data Domain

EMC exec touts all-cash bid as superior deal

In light of a new buyout offer for Data Domain Inc. by EMC Corp., NetApp Inc. said today it plans to review "all of its options" in considering a counteroffer for the deduplication vendor.

"In response to EMC's revised, unsolicited offer, the NetApp Board of Directors will carefully weigh its options, keeping in mind both its fiduciary duty to its stockholders and its disciplined acquisition strategy," NetApp CEO Dan Warmenhoven said in a statement. He promised an update "shortly."

EMC Corp. today upped its all-cash offer to purchase Data Domain from $US1.8 billion to $US2.1 billion, once again one trumping NetApp, which had offered US$1.9 billion.

EMC said that offer stands until midnight July 17.

While Data Domain has scheduled a special stockholders meeting on Aug. 14 to consider and vote on the NetApp merger proposal, EMC's offer is different from a merger agreement and Data Domain's stockholders need only decide to sell their shares to EMC by July 17.

Meanwhile, in an interview with Computerworld, an EMC executive argued that his company's offer is the most logical one for Data Domain shareholders. Matthew Olton, worldwide head of mergers and acquisitions at EMC, said his company is "dramatically" larger than NetApp and far more capable of infusing money into Data Domain to increase product development and worldwide marketing and sales. NetApp last year had $US3.4 billion in sales while EMC reported $US14.8 billion.

"I just have to believe it's much more of a strain on Netapp to digest an acquisition of this size than it is [for EMC]," Olton said.

In their respective offers for Data Domain, both NetApp and EMC included termination fees to be paid if Data Domain decided to walk away after agreeing to a merger. Today, EMC announced it had dropped any such deal protection clause. NetApp still has a termination fee in its proposal that would require Data Domain to pay it $US57 million if it walks away from a deal.

"If I'm a stock holder of Data Domain..., the EMC offer is an all-cash offer," Olton said. "The NetApp offer is part stock and part cash. To me, anytime you have stock as part of the consideration you have some uncertainty of what the value of that stock is going to be over time. Maybe you sell that stock on the first day, but that's a second transaction you have to go through to realize the value."

NetApp had said that EMC's proposal to acquire Data Domain posed anti-trust problems because EMC already owns several deduplication technologies, including technology in its Avamar appliance product and in a virtual tape library that runs re-branded software from FalconStor Software Inc.

NetApp also sells data deduplication technology with its Advanced Single Instance Storage (A-SIS) software, which is now included as part of its Data OnTap operating system.

The Federal Trade Commission reviewed both applications to acquire Data Domain and determined last week that neither company posed an anti-competitive threat to the marketplace.

"NetApp's got a pretty interesting dilemma now," Olton said. "Even if they want to match the price we put out there, I think they'll never get the vote. If NetApp increases its bid, it's going to have to drop the deal protection, and they'll never do that if they don't think they can beat EMC on price. I honestly think even if they match the price, EMC's offer is superior nevertheless."

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags emcnetappdata domain

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.
Lucas Mearian

Lucas Mearian

Show Comments

Brand Post

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Tom Pope

Dynabook Portégé X30L-G

Ultimately this laptop has achieved everything I would hope for in a laptop for work, while fitting that into a form factor and weight that is remarkable.

Tom Sellers


This smart laptop was enjoyable to use and great to work on – creating content was super simple.

Lolita Wang


It really doesn’t get more “gaming laptop” than this.

Jack Jeffries


As the Maserati or BMW of laptops, it would fit perfectly in the hands of a professional needing firepower under the hood, sophistication and class on the surface, and gaming prowess (sports mode if you will) in between.

Taylor Carr


The MSI PS63 is an amazing laptop and I would definitely consider buying one in the future.

Christopher Low

Brother RJ-4230B

This small mobile printer is exactly what I need for invoicing and other jobs such as sending fellow tradesman details or step-by-step instructions that I can easily print off from my phone or the Web.

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?