RSS
Email
Print
ShareEMC Outbids Rival NetApp For Data Domain
Posted by Mike Fratto, Editor on July 6, 2009
EMC has offered to acquire all of Data Domain's outstanding stock at $33.50 per share, or approximately 2.1 billion dollars. EMC has removed restrictions to the deal, urging Data Domain to do the same and wants to close in 2 weeks. The offer expires on July 17th.
In a letter to Data Domain's Board, EMC highlights three points in EMC's offer--the price is greater than NetApps, the deal can be closed quicker than NetApps, and the all cash acquisition isn't as variable as a part stock swap. On June 15th, Data Domain rejected EMC's $30.00 per share offer due to uncertainties tied to the offer such as the possibility of paying $57 million dollar termination fee to NetApp which wouldn't be recovered if the EMC deal fell through. It appears those uncertainties have been resolved. Ironically, NetApp also announced today that they have leapt the SEC and FTC regulatory hurdles and are clear to finalize the deal.
This is a rather interesting battle over a what many have called a feature of storage--de-duplication. Granted, de-duplication has many benefits beyond just saving on storage media. More organizations are, or are considering about using network back-ups over the WAN to improve disaster recovery plans. Additionally, the rise in virtualization and the ability to house applications and data in multiple data centers puts more pressure on maximizing WAN transfer speeds and reducing utilization.
The big question is what does EMC or NetApp get from Data Domain? Both suitors have de-duplication facilities already--EMC from it's acquisition of Avamar and NetApp A-SIS. Deni Connor, Principle Analyst, Storage Strategies Now, notes that the fight over Data Domain "validates that de-duplication is a feature of a storage product, rather than a product line. De-dupliation is a must have in any storage strategy."
For either EMC or NetApp, Data domain, which Connor characterizes as the leader in storage de-duplication, gives the acquiring company in-roads to customers and gets mind share among storage and IT professionals--mind share that is expensive and time consuming to develop. NetApp, as Byte and Switch Blogger Howard Marks points out, "is known as a NAS vendor. No body thinks of NetApp as a block storage vendor. Data Domain lets NetApp tell that story to a new set of customers, the SMB, used to buying storage from their server vendors."
Comment by smoked_2na on July 6, 2009 7:15 PM
All are valid points but to acquire this technology, what is a reasonable price.
For either company, at Data Domain's current 20M net earnings, even if this business doubles each year, it will take the new owner over seven (7) years to break even on the purchase price.
Is $2.1B a steep price, I think so!
Reply to this comment
Comment by Mike Fratto on July 6, 2009 7:41 PM
Sure, assuming the acquiring company continues to see the same growth rate. I don't know if revenue is additive. I could see in some cases where there might be a fall off due to customer uncertainty about the acquiring company and the future of the product.
This seems to me as much a move by EMC to get some leading technology while at the same time it away from NetApp.
Reply to this comment
Comment by nelly on July 7, 2009 6:48 PM
Data Domain's install base is mostly in the Americas. Netapp and EMC operate globally.
Reply to this comment
Comment by consumer on July 8, 2009 3:02 PM
But my EMC rep said that Avamar was better than Data Domain..... and I believed him. Now my boss wants answers about why EMC is buying DDUP!
Reply to this comment
Comment by Mike Fratto on July 8, 2009 3:06 PM
LOL
I think the interest in DDUP is more about getting their mind share + technology than just technology.
My question is how much better is one DDUP technology over another. They are all working off the same basic research. My guess is the duplication is probably pretty close in terms of performance.zy
Reply to this comment
Comment by Been DEDuped on July 8, 2009 6:59 PM
You should have listen a little closer to the message.
Data Domain is a target based dedupe technology while Avamar is a sourced based dedupe technology.
Educate yourself on the differences and then you'll be able to talk to your boss again.
Reply to this comment
Comment by consumer on July 8, 2009 8:57 PM
Why would the owner of a sourced based dedupe solution want to purchase a source based dedupe solution. Sounds redundant - pun intended.
Reply to this comment
Comment by Let there be spin on July 14, 2009 12:29 PM
Your EMC rep is awful or has never used AVAMAR. AVAMAR is a train wreck, a nail that EMC (the hammer) is still looking for a board (market) to drive AVAMAR into.
Reply to this comment
Comment by Natalie on September 20, 2009 10:46 PM
Amen to that statement. There is a big difference between Avamar and Data Domain's dedup. Avamar is a good fit for certain situations (particularly where companies have many remote sites with a small amount of data at each site replicating to the main data center) but if you ask any EMC rep now, Data Domain's dedup is far superior. funny how that works.
Reply to this comment