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NetApp Inc. (NTAP) declined to raise its offer to acquire Data Domain Inc. (DDUP) Wednesday, ending a bidding war for the data-storage company and allowing EMC Corp. (EMC) to swoop in with a 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.

With the Data Domain acquisition, EMC nabs a leader in the growing market for a technology known as deduplication, which reduces the amount of information in company data centers. The technology has been a hot seller despite the downturn, allowing Data Domain to post strong revenue growth even as many firms watched sales slump due to tech customers slashing spending amid the recession.

EMC has the opportunity to expand on that growth by coupling Data Domain's products with its much larger sales force, though Data Domain's $274 million in 2008 revenue pales compared to EMC's $14.9 billion in revenue last year.

After a bidding war that drove the offer price of Data Domain up by roughly $700 million from NetApp's original $25 a share offer in May, Data Domain's board of directors unanimously approved NetApp's decision and also recommended that Data Domain stockholders tender their shares to EMC.

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.

EMC declined to comment.

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 offer is all cash, while NetApp had offered $30 a share in a combination of cash and stock.

"EMC just had far more resources to devote to the battle than NetApp," said Brigantine Advisors analyst Mark Kelleher.

Following the news, NetApp's shares were up 4.3% to $19.18 in after-hours trading, as investors showed relief that NetApp wasn't pushed to spend more than it arguably could afford.

Data Domain's shares fell 1.4% to $33.42 and EMC's shares were up 0.6% to $12.60.

-By Jerry A. DiColo, Dow Jones Newswires; 212-416-2155; jerry.dicolo@dowjones.com

(John Kell contributed to this report.)