EMC Wins Data Domain, Bests NetApp With $2.1B Bid

EMC Corp. on July 8 finally won its battle to acquire data de-duplication vendor Data Domain Inc., agreeing to pay $2.1 billion in cash.

The deal came just a day after EMC countered rival NetApp Inc.'s $1.9 million bid for Santa Clara, Calif.-based Data Domain, which must now pay NetApp a $57 million deal-termination fee; the EMC deal doesn't stipulate such a penalty.

Sunnyvale, Calif.-based NetApp had started the takeover battle in March with an offer of $1.5 billion in cash and stock.

Steve Duplessie, an analyst at Enterprise Strategy Group in Milford, Mass. predicted that implementing the merger will be more difficult for EMC than its earlier acquisitions of VMware Inc. and RSA Security Inc.

Each of those companies, he said, provided EMC with products in new categories, and they are still operated as separate divisions. "I could make the argument that this will be harder because the [Data Domain] technology is nearer and dearer to EMC's core," Duplessie said.

In a statement, EMC said it expects the Data Domain technology to help it expand its next-generation disk-based backup and archive product offerings.

Jay Kidd, chief marketing officer at NetApp, said EMC's final bid surpassed what his company was willing to pay, and he contended that EMC significantly overpaid for Data Domain.

"You never want to judge the level of sanity of your opponent," Kidd said. "I think it will be a challenge for EMC to realize the ROI at this price."

Robert Stevenson, an analyst at TheInfoPro Inc. in New York, said that the deal should pay off for EMC over the long term as IT managers turn to de-duplication technology to help reclaim unused storage capacity.

This version of the story originally appeared in Computerworld's print edition.

Copyright © 2009 IDG Communications, Inc.

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