Data Domain's board told its stockholders to await recommendation on an unsolicited, all-cash offer by EMC when weighing NetApp's more recent bid, which tops EMC's by $100,000.
Data Domain Inc.'s board of directors asked shareholders to wait before deciding on EMC Corp.'s bid to buy the company for $1.8 billion, even though NetApp Inc. topped that offer by $100,000.
Data Domain's board said it would communicate to its stockholders on or before June 16 with its position on EMC's offer, as it is required by Rule 14d-9 of the Securities and Exchange Act of 1934.
EMC's unsolicited all-cash offer is viewed by some industry observers as superior to NetApp's cash and stock offer, but Data Domain's executives already signed an agreement to accept the NetApp deal. However, the board also agreed to NetApp's initial offer of $1.5 billion on May 20.
“At this time, the Board is not making a recommendation with respect to the EMC offer,” the board said in a statement. “At this time, the Board is reaffirming the recommendation in favor of Data Domain's merger with NetApp.”
According to Steve Duplessie, founder and senior analyst at the Enterprise Strategy Group in Milford, Mass., Data Domain's board had to accept NetApp's offer, but it is also free to recommend EMC's current offer or a follow-up bid.
“The way the restrictions work, is when there's a tender negotiation on acquisition, no one else is allowed to interfere with that. And so, they have to sign and accept that offer to have the opportunity now to have others come in and play,” Duplessie said.
