Deduplication vendor Data Domain's board of directors announced that they rejected EMC's $1.8 billion buyout offer, and said they are recommending to stockholders that they instead accept NetApp's $1.9 billion bid.
NetApp originally offered $1.5 billion in a cash and stock deal for Data Domain, but earlier this month EMC came in with a $30.00 per share all-cash bid, prompting NetApp to raise its offer.
“Our Board is committed to enhancing stockholder value, and after careful review with our outside advisors, determined that the $30 per share EMC offer is not in the best interests of our stockholders at this time,” said Frank Slootman, president and CEO of Data Domain. “We are pleased with the revised terms of NetApp's acquisition offer and feel it will provide great value to our shareholders and customers.”
The board went on to say in a prepared statement that if Data Domain were to enter into a merger agreement with EMC and terminate the merger agreement with NetApp, then Data Domain would be required to pay NetApp a $57 million termination fee that would not be reimbursed by EMC.
EMC responded to the move by reiterating its $30-per-share offer. CEO Joe Tucci said in a statement that his company's all-cash offer is superior to NetApp's cash and stock offer and gives Data Domain the ability to close the deal “promptly.”
Tucci said that in NetApp's June 3 Form S-4 filing, Data Domain communicated to NetApp that “price certainty and protection against fluctuations [in] NetApp's common stock were important to Data Domain.”
“We also note that on several occasions, Data Domain requested NetApp to increase the cash portion of its offer as well as the range of the collar,” Tucci said.
“We do not believe that Data Domain stockholders will approve the proposed transaction with NetApp. EMC remains committed to successfully completing this transaction,” he said.