Feeds

Data Domain bid war: Could NetApp go higher?

Hanging onto the balloon

Intelligent flash storage arrays

Comment Could NetApp go higher than its $1.9bn Data Domain bid if EMC raises its offer?

Stifel Nicolaus analyst Aaron Rakers writes in an investor briefing today: "Our conversations with Dan Warmenhoven, NetApp's CEO, last week would not discount that other potential bidders could surface – though we admittedly did not expect EMC to be one of them given their exiting Quantum-based solutions [note: EMC announced a financing commitment with Quantum totaling $100 million a few months ago].

"While we believe this suggested that NetApp was very much anticipating the potential for another bid and would likely therefore take a constructive approach to potentially raising its original offer, we believe EMC's all-cash offer, and likely further room to increase their offer, put NetApp in a tough position in terms of a counter-offer.

"The new $16.45 cash portion of the offer from NetApp implies approximately an additional $300 million cash outlay from the company compared to its original offer. NetApp exited its most recent quarter with a total cash position of $2.604bn, or $1.174bn on a net cash basis. It is also important to remember that NetApp has 52 percent of its total cash and investments tied up internationally [i.e., unable to tap unless paying a hefty tax].

"This compares to EMC exiting (the first quarter of this year) with approximately $9.785bn in total cash and investments, or approximately $3.885bn excluding VMware at $2.031bn and approximately $3.869bn tied up internationally [note: EMC can tap a $450m payment due from VMware]. We ultimately believe that EMC's cash position will allow them to make an increased offer above the current $30 per share offer in order to acquire Data Domain."

Suppose EMC rebids at $2.1bn. Were NetApp to raise its bid to $2.3bn, then finding the cash to do that could mean it has to bring cash into the USA from overseas and incur a tax liability, making the effective cash committment higher.

Data Domain shares are currently trading at $32.54, suggesting that investors in general think a higher bid is coming in what is turning into a high stakes poker game. ®

Choosing a cloud hosting partner with confidence

More from The Register

next story
'Kim Kardashian snaps naked selfies with a BLACKBERRY'. *Twitterati gasps*
More alleged private, nude celeb pics appear online
Wanna keep your data for 1,000 YEARS? No? Hard luck, HDS wants you to anyway
Combine Blu-ray and M-DISC and you get this monster
US boffins demo 'twisted radio' mux
OAM takes wireless signals to 32 Gbps
Google+ GOING, GOING ... ? Newbie Gmailers no longer forced into mandatory ID slurp
Mountain View distances itself from lame 'network thingy'
EMC, HP blockbuster 'merger' shocker comes a cropper
Stand down, FTC... you can put your feet up for a bit
Apple flops out 2FA for iCloud in bid to stop future nude selfie leaks
Millions of 4chan users howl with laughter as Cupertino slams stable door
Students playing with impressive racks? Yes, it's cluster comp time
The most comprehensive coverage the world has ever seen. Ever
Run little spreadsheet, run! IBM's Watson is coming to gobble you up
Big Blue's big super's big appetite for big data in big clouds for big analytics
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
The next step in data security
With recent increased privacy concerns and computers becoming more powerful, the chance of hackers being able to crack smaller-sized RSA keys increases.