Bidding war: NetApp counters EMC for Data Domain with $1.9B offer
NetApp ups its cash-and-stock offer by $400M
Computerworld - NetApp Inc. today said it will offer $1.9 billion to buy data de-duplication vendor Data Domain Inc. to beat out EMC's $1.8 billion offer for the company.
"The complementary nature of the Data Domain and NetApp product lines will result in higher aggregate growth compared to the redundancies that would result with the EMC product line," NetApp CEO Dan Warmenhoven said in a statement this morning. "We are as committed to this partnership now as we were when we first announced our intent to acquire Data Domain."
Data Domain, based in Santa Clara, Calif., said it had no comment on the new offer.
In March, Sunnyvale, Calif.-based NetApp announced a cash-and-stock offer of $1.5 billion to buy Data Domain, and it appeared the two companies had reached an agreement.
Then, on Monday, EMC Corp. offered an all-cash deal of $1.8 billion for Data Domain, a leading seller of data de-duplication technology, which is a hot commodity in the enterprise and small to midsize business market.
"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," said EMC CEO Joe Tucci. "Even in stand-alone mode, you're seeing a projection of this company doing $480 million in revenue next year. We think we can grow it faster."
NetApp's offer remains a cash-and-stock deal.
About 30% of companies have deployed some form of data de-duplication, according to Garter Inc. Data de-duplication, or single instancing storage, can reduce data storage needs by a ratio of 20:1 to 30:1 on average by saving only one copy of block or file data.
Data de-duplication technology can work at the server application level, the network layer or as part of the backup and archive process, depending on where the technology is deployed. Data Domain's primary technology, the DDX series, is in the form of a virtual tape library (VTL) or secondary disk array that resides between primary storage systems and tape archive systems. As data is scheduled for backup, it moves first to a Data Domain VTL where duplicate copies of data are eliminated and the remaining data either resides on the disk array for a predetermined amount of time or are archived on tape silos.
Data Domain also sells a gateway series of appliances that are aimed at de-duplicating data on third-party Fibre Channel storage arrays as backup applications move the data to tape silos.
Both EMC and NetApp have their own data de-duplication tools. NetApp's A-SIS de-duplication product -- once sold as a stand-alone product -- is offered as part of the Data OnTap operating system that runs the company's network-attached storage arrays, considered a form of primary storage de-duplication.
For its part, Hopkinton, Mass.-based EMC sells the Avamar appliance, a product that it obtained when it bought Avamar Inc. for $165 million in 2006. That product is aimed at de-duplicating data as it moves from application servers to primary storage arrays.
Also, EMC sells a two virtual tape libraries -- the DL3D 3000 and DL4000 -- which use rebranded deduplication software from Quantum Corp. and FalconStor Software Inc. and a disk-based backup appliance -- the Disk Library 3D 1500 -- using Quantum's software.
NetApp's CEO said his company's offer for Data Domain is "superior to EMC's previously announced, unsolicited proposal," because the two companies' technologies are more complementary, and it is an "opportunity for Data Domain shareholders to participate in the future success of the combined NetApp and Data Domain entity."
"The cultural compatibility between Data Domain and NetApp will maximize the potential for continued innovation from a creative and motivated employee base," Warmenhoven said. "This will not only create a meaningful choice for our customers but also lead to a complementary combination with no obstacles to an expeditious close of the acquisition."
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