NetApp (NTAP) has countered EMC's takeover bid for Data Domain with a revised offer of $30 a share in cash and stock. The new offer matches EMC's price per share, but includes stock while EMC's bid is all cash. Meanwhile, Data Domain's share price continued to rise in anticipation of a higher bid from EMC.
NetApp announced May 20 that it was buying Data Domain (DDUP) for $25 a share, or $1.5 billion. On Monday EMC jumped into the fray with a surprise bid of $30 a share. NetApp is asserting that its revised offer is superior to the EMC bid.
"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. "The complementary nature of the Data Domain and NetApp product lines will result in higher aggregate growth compared to the redundancies that would result with the EMC product line."
At Barron's Tech Trader Daily, Eric Savitz wonders why NetApp would simply match EMC's offer when its bid includes stock, which many investors would see as less attractive than an all-cash offer. "If I’m a DDUP holder (I’m not, of course) I have to think I’d want to take the cash, and then use it to buy NTAP shares directly if I think that’s the best use of my cash. The unstated issue here is that NTAP does not have the balance sheet to support an all cash bid, which is why it made a cash-and-stock bid in the first place."
Shares of Data Domain have moved up to $32.25 in early trading, so investors clearly believe EMC will up the ante with a higher offer.