EMC earlier this afternoon put out an offer for $30 a share for Data Domain, $5 more than NetApp’s bid. In after hours trading, Data Domain’s stock is up over $30 indicating that the street believes NetApp will be forced to match. NetApp stock is also up in after hours trading so somehow the street thinks a bidding war is good for NetApp. Sometimes things aren’t so logical on Wall Street– this won’t likely hold.
Here’s the EMC release.
This is interesting war games. One has to wonder how hard Data Domain shopped the company before settling on the NetApp bid. If I were a DDUP shareholder I wouldn’t be pleased given that EMC is willing to spend $300M than NetApp offered. I had always assumed EMC passed because it felt (as did I) that the NetApp bid was too high in these crazy economic times. But it’s obvious Data Domain didn’t really get what it could have from the NetApp bid.
[6/2/2009 Update: If I were a DDUP shareholder I wouldn’t be pleased…Scratch that – brain freeze – of course DDUP shareholders are happy…the stock’s up over 31! However, there has been at least one lawsuit filed which claims DDUP shirked its fudiciary responsibilities by not negotiating a high enough price and signing a ‘no shop’ clause with a $57M deal cancellation fee.
QTM is getting crushed today because no one believes Tucci when he says the QTM product will remain part of EMC’s portfolio. Why would it long term? Well because EMC just put a bunch of dough into QTM and has probably made some long term commitments. Also, Commvault and Falconstor are up on the news as they become more and more attractive every counter offer that lobbed by the competitors. More thoughts on EMC’s integration challenges.]
If NetApp counters and outbids EMC, EMC extracts some serious pain on NetApp. If EMC wins it gets Data Domain– I could envision worse things than complete domination of the data reduction market. While I’d like to see EMC do other things with its cash, like get it’s act together in information management, this sure beats most days’ news.
Bottom line: EMC doesn’t mess around. They saw an opportunity to play hardball and they took it. Reminds me of Yankess / Red Sox wars with the Boston-based EMC playing Steinbrenner. How ironic.