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Q&A: NetApp's Jay Kidd discusses bidding war with EMC for Data Domain

NetApp, Data Domain reach revised acquisition agreement following rival hostile offer

June 3, 2009 06:39 PM ET

Computerworld - NetApp Inc. today reached a revised acquisition agreement with data deduplication vendor Data Domain Inc., but rival EMC has already one-upped NetApp's offer to buy the company once before, and may again.

NetApp Chief Marketing Officer Jay Kidd spoke with Computerworld about EMC's somewhat surprise entrance into the Data Domain acquisition and why his company is a better suitor than its chief rival.

Were you surprised by EMC's entrance into the bidding process? Not completely. It's always difficult to predict the future actions of your competitors, and with EMC particularly you never know how aggressive or insane they may get on things. Clearly, their offer indicated they're very concerned with both NetApp and Data Domain as competitors.

So EMC is an unwelcome suitor to Data Domain? It was a hostile tender offer without the involvement of [Data Domain's] management. And hostile offers in tech domains usually don't do very well.

But even with an agreement, EMC may come back and try to wow Data Domain with a higher bid. Could you and would NetApp go higher? Just to clarify. We have an agreement with Data Domain. It's not tentative. We had an agreement before and we have their signature on the revised agreement as well. But the nature of publicly traded stocks is that it doesn't preclude someone from making an appeal to share holders. It's rare and difficult, but it doesn't preclude it. Will another such offer be made? Hard to predict. Certainly, EMC's recent release of reaffirming the value of their $30 [per share] offer, indicates that's as high as they'd like to go. If they decide to go higher, then it's a question of what's their decision-making process.

But if they do, would you counter offer? I don't want to speculate about what may happen. We're committed to this deal and believe in the value of it.

So why is EMC even in the mix? Is this specifically to force its rival, NetApp, to pay more money for this acquisition? I do believe EMC is concerned enough about NetApp about a long-term competitor that they may do things that are not in the best interest of customers just to impede our progress. And, it's quite possible that this action is just that.

Why is NetApp a better suitor for Data Domain? The two product lines are quite complimentary. Even Data Domain told us that when they sell, they were less successful selling into [EMC] install-based accounts ... so that creates growth opportunity for NetApp in terms of adding this to our portfolio. Data Domain's business is 77% in North America, whereas over 50% of our business is outside of North America. So we have a great opportunity to expand distribution of the Data Domain product line more deeply into Europe and also into enterprise accounts.

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