EMC makes $1.8 billion bid for Data Domain

The all-cash offer valued at $30 a share by EMC represents a 20 percent premium over the $25 per share cash and stock bid made by NetApp.

Benefits of acquisition
EMC Chief Executive Officer Joseph Tucci stated that the acquisition was all about accelerating growth. The deal would help broaden the company’s range of storage products and increase its revenue and profit.

Tucci said EMC had been looking at Data Domain for some time. "We didn't just wake up one day and say maybe this is a good thing to do.

“We've had our eye on Data Domain and obviously somebody moved before we did. Even in stand-alone mode, you're a seeing projection of this company doing $480 million in revenue next year. We think we can grow it faster.”

Data Domain specializes in deduplication services - a technology that helps avoid repeated storage of the same data. This technology uses storage capacity more efficiently, reducing demand for storage devices, which is convenient for cutting hardware costs, floor space and electricity use in computer rooms.

EMC said it was attracted to Data Domain by its fast-growing revenue base, its management team, and sales force.

Tucci stated, "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."

Tucci added that the proposed merger would strengthen the combined companies' foothold in the fast-growing and very important next-generation disk-based backup and archive market, and also result in a business larger than a billion dollars for EMC in 2010.

Data Domain declined to comment on the EMC offer. NetApp officials could not immediately be reached for comment.

EMC is the biggest company in storage, hardware and software, with 19 percent market share, compared with NetApp’s 7 percent. Data Domain has less than 2 percent share.

Data Domain shares rose by 16.51 percent to $30.70 in after-hours trading in New York while EMC was down 1.77 percent at $12.20 and NetApp gained 1.50 percent to $21.00.