In his
continued quest to acquire Data Domain, EMC Chairman and
CEO Joe Tucci went hard-sell this week to
convince Data Domain employees – the vast majority of whom are also
shareholders – that they would benefit in far greater ways if purchased by his
storage juggernaut versus rival NetApp.
In an open letter
to Data Domain employees, Tucci pitched EMC’s
market-leading status, its proven-track record in acquiring and successfully
integrating other growth companies, a tolerant and flexible corporate culture
and financial health. While not directly derisive of NetApp, whose $1.9 billion
half-cash, half-stock bid for deduplication specialist Data Domain has been
accepted, Tucci nonetheless made it clear he believes the NetApp deal to be
inferior on many levels.
“ EMC
doesn't acquire to consolidate,” his letter reads. “We acquire growth companies
with great people and innovative technologies, and we invest in accelerating
their success while their cultures continue to grow and develop. Many of the
people in these companies have gone on to leadership positions in EMC,
and we would expect the same potential from the talented people at Data
Domain."
While
Data Domain’s board of directors has accepted NetApp’s counterbid, EMC
continues to try to disrupt the deal in a hostile takeover, maintaining that
its all-cash $1.8 billion bid is a better deal for shareholders. Tucci’s not
backing down.
“Looked
at purely from a financial perspective, EMC's
$30 per share all-cash tender offer to acquire all of the outstanding stock of
Data Domain remains superior to NetApp's part-stock, part-cash offer,” he
writes.
But
while Tucci clearly touted what he believes to be the pure financial benefits
of an EMC-Data Domain deal, his letter emphasized
the career and growth opportunities to be found working for EMC,
the emphasis on innovation and global presence.
“Not
only are we deeply committed to our people and their development, we also have
by far the largest storage-focused R&D budget in all of IT, which ensures a
product-development pace that enables us to derive the vast majority of our
revenues from products that are less than 18 months old,” he said.
From an
acquisition standpoint, Tucci points to expertise at integrating companies into
the fold, and while he doesn’t cite past EMC
purchases by name they include some blockbusters such as VMware, Documentum, RSA
Security, Iomega and Data General.
NetApp,
for its part, does not share the same positive acquisition history, according
to a widely held view in the industry. The company is often criticized for
poorly integrating the entities they acquire. In the last several years, the
company has purchased the likes of Decru, Onaro and Topio, but after the
initial fanfare there has been very little heard about what became of these
product lines. Spinnaker Networks is probably the most successful NetApp
acquisition.
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