EMC To Acquire Data Domain After NetApp Backs Down

    DOW JONES NEWSWIRES 
 

NetApp Inc. (NTAP) declined to offer a higher bid to acquire Data Domain Inc. (DDUP), terminating its merger agreement and allowing EMC Corp. (EMC) to swoop in with its superior $2.2 billion bid.

Data Domain said it entered into a definitive merger agreement with EMC, which will acquire the company for $33.50 a share in cash. Data Domain's board of directors unanimously approved the decision, as it also recommended that Data Domain stockholders tender their shares to EMC.

Following the news, NetApp's shares were up 4.3% to $19.18 in after-hours trading, while Data Domain's shares fell 1.4% to $33.42 and EMC's shares were up 0.6% to $12.60.

Many expected EMC to eventually acquire Data Domain because it has a larger war chest than NetApp. On Monday, EMC raised its offer for Data Domain by 11% to $2.2 billion, up from last month's bid of $30 a share. EMC's bid is all cash, while NetApp had offered $30 a share in a combination of cash and stock.

As a result of the broken deal, NetApp said it received a $57 million break-up fee from Data Domain. Data Domain also said it would cancel its special meeting of stockholders scheduled next month to discuss the NetApp merger.

"While NetApp's acquisition of Data Domain would have produced benefits for customers and employees and complemented NetApp's existing growth trajectory, we remain highly confident in our already compelling strategic plan, market opportunities and competitive strengths," said NetApp Chairman and Chief Executive Dan Warmenhoven.

-By John Kell, Dow Jones Newswires; 212-416-2480; [e-mail]