EMC has won the bidding war for deduplication vendor Data Domain after raising its cash offer to $2.1 billion.
In response to EMC’s upping the stakes, rival bidder NetApp declined to revise its bid and ceded the acquisition to EMC, despite having the support of Data Domain’s board. NetApp received a $57 million break-up fee from Data Domain following the termination of the merger discussions.
NetApp CEO Dan Warmenhoven said the company could not justify a protracted bidding war and would instead focus on its existing strengths and opportunities.
“NetApp applies a disciplined approach to acquisitions, one focused intently on creating long-term value for our stockholders,” he said. “We therefore cannot justify engaging in an increasingly expensive and dilutive bidding war that would diminish the deal’s strategic and financial benefits.”
“While NetApp’s acquisition of Data Domain would have produced benefits for customers and employees and complemented NetApp’s existing growth trajectory, we remain highly confident in our already compelling strategic plan, market opportunities, and competitive strengths.”
Meanwhile EMC CEO Joe Tucci said Data Domain represented “a compelling acquisition from both a strategic and financial standpoint. We look forward to bringing Data Domain together with EMC to form a powerful force in next-generation disk-based backup and archive. I have tremendous respect for Data Domain’s people, technology and business, and anticipate great things ahead for our respective companies, our customers and partners.”
EMC entered the bidding war for Data Domain with bigger pockets than NetApp, and quickly raised the stakes beyond NetApp’s original $1.5 billion offer – a 25% premium for the money-making de-duplication innovator. NetApp then matched EMC’s offer of $1.9 billion, and gained the support of Data Domain’s board who urged stockholders to support the NetApp bid.
Such an intense bidding war in a recessionary period further validates deduplication technology, which has historically had a difficult time convincing notoriously-cautious data managers that deleting data, even copies, is a salient way of optimising disk space.
Even while the cost of disk per megabyte has been plummeting, booming quantities of data brought on by the need to archive for longer periods due to compliance reasons have reduced those reservations. Dedupe has also found a natural home on virtualised systems, which typically involve vast amounts of replicated or similar data.
It is also likely that EMC also sees dedupe as part of its vision for solid state drives (SSD). With the benefits of SSD offset by its significantly higher cost-per-megabyte than regular spinning hard drives, anything that improves the efficiency of stored data is highly desirable.
EMC said it expected to complete the acquisition by the end of July.