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EMC forced to extend Data Domain offer

Barely any takers so far

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EMC has lengthened the offer period for its $30/share bid for Data Domain by 11 days, after attracting a derisory level of acceptance for the bid. It says this is to provide "additional time to satisfy closing conditions".

EMC chairman and CEO Joe Tucci referred to the Federal Trade Commission's regulatory review of the bid in his statement: "We continue to anticipate a routine review by the FTC resulting in a timely regulatory approval."

The FTC is looking at the danger that a successful EMC takeover of Data Domain could put too much deduplication business in EMC's hands.

A competing $30/share, part-stock, part-cash bid from NetApp has been agreed by the Data Domain board.

So far just 0.28 per cent of Data Domain's shares, 174,645, have been committed to the EMC bid. The shares are priced at $33.13 on the open market and have been above the $30 point since June 2, showing that the market as a whole expects a higher bid. It is thought that this could come from EMC, since its present bid has been rejected by the Data Domain board and because it has greater cash resources than NetApp.

EMC has previously made an overwhelming bid for a company which had rejected a previous bid in favour of an accepted offer from another company. That was for Iomega which now sits comfortably in the EMC stable.

There are two class action lawsuits in existence, which argue that Data Domain's board has not done all it could to maximise the value of the company, as they argue it should, in the acquisition process, by favouring NetApp.

The ball is in EMC's court as NetApp has acceptance for its bid. With the tender offer extension in its pocket, it looks as if EMC could make a new bid next week, and then it will be decision time for NetApp. Does it raise its bid or not?

The omens for NetApp are not good - what EMC wants, EMC tends to get. ®

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