July 6, 2009 -- If you thought EMC was out of the race for Data Domain – think again. Just as NetApp announced this morning that it has received the go ahead from federal regulators to take its acquisition proposal to a stockholder vote, EMC once again raised its offer to acquire Data Domain. The EMC bid now stands at more than $2 billion.
The Data Domain Board of Directors currently plans to hold a meeting of stockholders and a merger vote on August 14. EMC is hoping to spoil the party by forcing Data Domain’s stockholders to take a long, hard look at its latest offer.
Under its revised proposal, EMC has increased its offer to acquire all the outstanding common stock of Data Domain to $33.50 per share in cash, for a total value of approximately $2.1 billion, net of Data Domain’s cash. NetApp’s offer is currently $1.9 billion.
EMC CEO Joe Tucci outlined the offer today in a letter to Data Domain’s Board Chairman, Aneel Bhusri. Here is the full text of Tucci’s letter:
On behalf of EMC, I am pleased to submit to you and your Board of Directors this revised proposal to acquire all outstanding Data Domain common stock for $33.50 per share in cash. This price represents a substantial premium to the cash and stock proposal of NetApp and is a Superior Proposal as defined in your merger agreement with NetApp. The Board of Directors of EMC has unanimously approved this proposal.
As with our prior proposal, EMC’s revised proposal is not subject to any financing or due diligence contingency, and we will use existing cash balances to finance the transaction. In addition, we have received all necessary regulatory approvals. We are amending our currently outstanding tender offer to acquire all of the outstanding shares of Data Domain to reflect our higher price.
We enclose a revised definitive agreement that has been executed on behalf of EMC and which reflects our new $33.50 per share, all cash offer. This agreement is substantially identical to the NetApp proposal except as to the fact that the EMC offer:
-- Is materially higher in price;
-- Reflects our faster two-step structure, which will enable you to close almost a month faster than under the NetApp proposal; and,
-- Very importantly, eliminates all deal protection provisions that could further impede the maximization of stockholder value, including the no solicitation section and the break-up fee obligation.
This last point is very significant to you and your stockholders. Data Domain does not have any justification for continuing deal protection provisions for NetApp or any other party given our willingness to proceed without them. It was questionable agreeing to deal protections in your initial agreement with NetApp, when you knew of our interest in acquiring the company. There is no basis for continuing with them now.
We strongly believe that the Data Domain Board of Directors should pledge to eliminate all deal protection provisions that could further impede maximizing stockholder value. Such a commitment would be the proper exercise of the Board's fiduciary duties to secure a transaction in the best interests of Data Domain stockholders, particularly in light of the EMC proposal described in this letter.
With the early termination last week of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 concluding all regulatory conditions to this transaction, EMC could be in a position to close this transaction and deliver cash to your stockholders in as little as two weeks.
In comparison to your proposed transaction with NetApp, EMC’s proposal represents a far superior alternative for your stockholders.
EMC’s proposal provides higher absolute value for each Data Domain share.
As an all-cash offer, EMC’s proposal offers greater certainty of value.
EMC’s definitive agreement does not contain deal protection provisions that could further impede the maximization of stockholder value – including any termination fee – and is more favorable to the stockholders of Data Domain.
EMC’s transaction offers a faster time to close of almost a month.
We continue to believe that a business combination with EMC will deliver substantial and superior benefits to your company’s stockholders, customers, employees and partners. Since June 1st, when we submitted to you our prior proposal, we have received wholehearted support from many of your stockholders and customers validating our confidence in these benefits.
We encourage you to accept the merits of our proposal and look forward to your execution of the definitive agreement enclosed.
Very truly yours,
Joseph M. Tucci
Chairman, President and Chief Executive Officer
Further details on EMC’s latest offer are available on EMC’s website