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Say it ain’t so.
EMC’s momentous efforts to acquire Data Domain have fallen by the wayside.
Data Domain’s board has asked stockholders to reject EMC’s offer to purchase the company and, instead, has recommended a merger with NetApp.
EMC and NetApp have been fighting a bidding war over the de-duplication and backup vendor throughout June, with EMC offering $1.8 billion, all in cash; and NetApp offering $1.9 billion of cash and stock.
This news hits EMC hard, especially since it spent the last few weeks trying to brainwash court Data Domain employees, and even contemplated raising the EMC offer to over $2 billion.
So what happened?
Industy observers say several factors were in play.
First: allegiance.
NetApp and Data Domain had reportedly already agreed to an acquisition when EMC joined the fray, leading to an escalation in price.
Second: poor tactics.
Data Domain faulted EMC for not engaging in direct negotiation, and attaching conditions that would allow EMC to terminate its offer at any time. Data Domain also said that it would have to pay NetApp a $57 million termination fee if it agreed to a merger with EMC.
Third: monopoly.
This factor is pure speculation, but there was word that Data Domain was concerned an EMC purchase might be blocked by anti-trust regulators. EMC, the world leader in high-end data storage systems, already has a line of de-duplication products, and acquiring Data Domain could have ensured its dominance in the market.
“Our Board is committed to enhancing stockholder value and, after careful review with our outside advisers, determined that the $30 per share EMC offer is not in the best interests of our stockholders at this time,” said Data Domain CEO Frank Slootman.
So far EMC has not commented on Data Domain’s recommendation. It has, however, reiterated it’s all cash offer for Data Domain - and has even gone so far as to predict that Data Domain’s stockholders will not approve a NetApp merger.
We shall see, won’t we?
Talk about dangling a carrot. This may be a story we’ll be writing about for several more weeks.
Again, I say stay tuned.
Get Caught Up:
EMC’s Bid For Data Domain Could Top $2.1B
EMC Reaches Out To Data Domainers In An Open Letter
NetApp Starts Bidding War For Data Domain
EMC Eyes Data Domain For Acquisition
| Around the ’sphere:
Data Domain Favors NetApp Over EMC | John Paczkowski | Digital … - What part of “No” does EMC not understand? On Monday the company once again said its bid for data storage equipment maker Data Domain is “superior” to a competing offer from NetApp. This, despite the fact that Data Domain earlier in the … Data Domain tells EMC to take a hike (or make a better offer … - Not surprisingly, Data Domain management today recommended its shareholders reject EMC’s offer to buy the deduplication vendor “at this time” in favor of an offer from NetApp. Data Domain Tells Shareholders to Reject EMC - CIO.com - Business … - Data Domain shareholders should reject EMC’s unsolicited takeover bid or risk being left without a suitor, Data Domain’s board of directors said Monday. Data Domain officially rejects EMC: Will cash be king? | Between … - Larry Dignan, Sam Diaz and other IT industry experts, blogging at the intersection of business and technology, deliver daily news and analysis on vital enterprise trends. |
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