A ‘feature rich’ bidding war for Data Domain

Contact: Brenon Daly

A multibillion-dollar bidding war over a technological feature? As crazy as it sounds, that’s one way to look at the contested effort to acquire Data Domain. (Obviously, the company offers much more than the data de-duplication technology that it’s known for. But some rivals – and even one of its current suitors – have nonetheless dismissed Data Domain as a ‘feature’ in the past.) EMC on Monday topped NetApp’s two-week-old agreement to pick up Data Domain.

Even though EMC raised the bid on Data Domain to $30 in cash for each share, the market is clearly expecting more. In mid-afternoon trading Tuesday, Data Domain shares were changing hands at $31.27 – roughly 4% above EMC’s offer. NetApp, which originally offered $25 in cash and stock for each share of Data Domain, hasn’t yet responded to EMC’s move. (As an aside, the bid-and-raise for Data Domain came just hours after we noted bidding wars for two other public companies.)

EMC entering the fray for Data Domain isn’t surprising. According to its offer to purchase the company filed with the US Securities and Exchange Commission, EMC planned to discuss an acquisition with Data Domain in early May, but the target cancelled the meeting. Only a few days later, NetApp, which is being banked by Goldman Sachs, announced its bid for Data Domain, advised by Qatalyst Partners. At this point, EMC hasn’t formally retained a banker to advise it on landing Data Domain (much to the dismay of fee-hungry bankers everywhere). Incidentally, speaking of Qatalyst, the boutique officially announced that it has hired former Goldman Sachs software banker Ian Macleod, which we heard about more than two months ago.