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BOSTON, June 15 (Reuters) – Data Domain Inc (DDUP.O), a specialty storage equipment maker, rejected a hostile takeover bid from rival EMC Corp (EMC.N), asking shareholders to back a $30-per-share deal it has signed with NetApp Inc (NTAP.O).

The widely expected move sets the stage for EMC, the top maker of corporate data storage equipment, to raise its $30-per-share cash offer for Data Domain in a rare bidding war. EMC and NetApp are fighting to buy faster-growing Data Domain as the weak economy batters sales at both companies.

Data Domain’s board said on Monday that it had been unable to engage in discussions with EMC because the company had not agreed to enter into standstill or confidentiality agreements as required by the merger deal it signed with NetApp last

The board added that it believed a deal with NetApp was more certain to close than EMC’s offer.

If Data Domain were to break its agreement with NetApp, it would incur "considerable transaction expenses," and under most scenarios be required to pay NetApp a $57 million termination fee, Data Domain’s board said in a filing with the U.S. Securities and Exchange Commission.

Data Domain shares fell 1.5 percent to $33.00 in trading on the Nasdaq, suggesting investors are expecting EMC to raise its offer.
(Reporting by Jim Finkle, editing by Matthew Lewis)