EMC surprised the storage industry by launching an unsolicited bid for Data Domain, after that company had agreed to be acquired by NetApp. EMC is offering $30 a share, or $1.8 billion in cash, and said it was immediately launching a "tender offer for all outstanding Data Domain common stock in order to expedite the timing of this transaction." NetApp thought it had a deal at $25 a share, or $1.5 billion in a mix of cash and stock.
Data Domain is among the hottest companies in storage, thanks in large part to its data deduplication technology that eliminates duplicate copies of data and files and helps enterprises and other organizations reduce the amount of data that needs to be stored and the requirement to buy more storage capacity. Data Domain doubled its revenue in 2008 to $274 million and reported net income of $21.6 million, compared to a loss of $3.7 million a year earlier.
In a letter to Frank Slootman, Data Domain president and CEO, Joe Tucci, the chairman, president and CEO of EMC, called his company's offer "substantially superior to the NetApp proposal" and wrote that EMC was "disappointed that we were not given an opportunity to explore a business combination prior to the announcement of your proposed transaction with NetApp, particularly since I believe you should have been aware of our interest."
EMC said in a release it was making an offer to buy Data Domain "for its fast-growing revenue base, its strong data protection-focused management team and sales force and its highly complementary storage software technology that will help to accelerate both companies' ability to deliver industry-leading next-generation disk-based backup and archiving solutions for customers."
Tucci also said: "Strategically, this combination will further enhance our ability to broaden EMC's best-in-class storage portfolio for the benefit of EMC and Data Domain customers and this, in turn, will accelerate EMC's top-and bottom-line growth rates. Our substantially superior proposal is a win-win for both companies."