NetApp bids $1.9 billion in cash and stock for deduplication vendor Data Domain, and says the acquisition would be more beneficial than

In a press release issued this morning, NetApp announced a revised proposal to acquire Data Domain, heating up the battle between the storage giant and rival vendor EMC.

Under the terms of the revised proposal, NetApp
will pay $1.9 billion in cash and stock, or about $30 per share. This offer is higher than EMC’s unsolicited, all-cash bid for Data Domain made yesterday, a proposal valued at $1.8 billion.

“Our strategic rationale remains the same and we firmly believe that the combination of our two companies will provide a greater opportunity and
risk-adjusted value for Data Domain shareholders, customers, and
partners," said Dan Warmenhoven, chairman and CEO of NetApp in a statement.

Warmenhoven said in the statement that NetApp’s acquisition of Data Domain would result in a more complete set of complementary product lines for solution providers and end customers, whereas redundancies
would result were EMC to purchase the deduplication and storage management vendor.

The Data Domain portfolio would
expand NetApp’s reach in the market for heterogeneous disk-based backup, and would increase NetApp’s ability to capitalize on
the rapid growth of disk-based backup adoption, according to the statement.

Warmenhoven added that NetApp’s offer for Data Domain is superior to EMC’s proposal, as it offers a combination of “value certainty” and the opportunity for Data Domain shareholders to "participate in the future success of a combined NetApp and Data Domain

Warmenhoven added, "The cultural compatibility between Data Domain and
NetApp will maximize the potential for continued innovation from a
creative and motivated employee base. This will not only create a
meaningful choice for our customers but also lead to a complementary "combination with no obstacles to an expeditious close of the" acquisition. Therefore, we are as committed to this partnership now as we were when we first announced our intent to acquire Data Domain," he said in the statement.

In a conference call announcing its bid for Data Domain earlier this week, EMC Chairman, President and CEO Joe
Tucci said that EMC wants to
combine Data Domain’s deduplication technology with its own, but will
run the company as a division of EMC and further invest in research and
development. Tucci added that EMC would use its extensive sales and
marketing infrastructure to sell Data Domain products to a much larger
potential customer base.

The intense battle to win Data Domain comes as no surprise to many industry leaders. Cisco CEO John Chambers, in an interview with Channel Insider at the
networking company’s partner summit in Boston this week, remarked on
the dual bids, citing the heightened interest in deduplication
technology. "There’s a tremendous amount of growth in this area, so
it’s no surprise that NetApp and EMC are interested in this area,"
Chambers said.

NetApp first announced it planned to acquire Data Domain
on May 20, 2009, and EMC made a surprise bid June 2, 2009.