EMC ( EMC) has muscled up on cash and its merger execution skills in pursuit of Data Domain ( DDUP). EMC upped its offer for Data Domain to $33.50 a share Monday and promised a swifter closure than rival bidder NetApp ( NTAP). The Hopkinton, Mass. data storage shop's new takeover offer for Data Domain is up from the prior offer of $30 a share and above the $30 stock-and-cash offer from NetApp. The news comes as Data Domain had accepted NetApp's offer and has scheduled a special shareholder vote on the deal for Aug. 14.
The bidding war started soon after NetApp offered $25 a share in stock and cash for Data Domain in May. A month later, in a hostile bid, EMC offered $30 a share for Data Domain, a specialist in eliminating duplicate information in data storage systems. Analysts and investors had expected EMC to use its larger cash pile to out-bid smaller NetApp. "In our view, the final 'nail in the coffin' will likely be EMC raising its all-cash bid to $33 to $35
per share in the near-term," Broadpoint AmTech analyst Brian Marshall wrote in research note last month. "At this level, we believe NetApp will not be able to continue and will have to settle for the $57 million break-up fee." Both EMC and NetApp compete directly in the data storage market. Acquiring Data Domain is thought to be a way for these players to plug a hole in its product offering, as well as prevent the perception that they may be falling behind in storage technology arms race.
Data Domain shares rose 99 cents, or 3%, to $34.20 in premarket trading Monday as investors sensed that the bidding war would continue.