Bidding war: NetApp counters EMC for Data Domain with $1.9B offer

NetApp Inc. today said it will offer $1.9 billion to buy data de-duplication vendor Data Domain Inc. to beat out EMC's $1.8 billion offer for the company.

"The complementary nature of the Data Domain and NetApp product lines will result in higher aggregate growth compared to the redundancies that would result with the EMC product line," NetApp CEO Dan Warmenhoven said in a statement this morning. "We are as committed to this partnership now as we were when we first announced our intent to acquire Data Domain."

In March, NetApp announced a cash and stock offer of $1.5 billion to buy Data Domain, and it appeared the two companies had reached an agreement.

Then, on Monday, EMC Corp. offered an all-cash deal of $1.8 billion for Data Domain, a leading seller of data de-duplication technology, which is a hot commodity in the enterprise and small- to mid-sized business market.

"We didn't just wake up one day and say maybe this is a good thing to do. We've had our eye on Data Domain and obviously somebody moved before we did," Tucci said. "Even in stand-alone mode, you're seeing a projection of this company doing $480 million in revenue next year. We think we can grow it faster."

NetApp's offer remains a cash and stock deal.

About 30% of companies have deployed some form of data de-duplication, according to Garter Inc. Data de-duplication, or single instancing storage, can reduce data storage needs by a ratio of 20:1 to 30:1 on average by saving only one copy of block or file data.

Data de-duplication technology can work at the server application level, the network layer or as part of the backup and archive process, depending on where the technology is deployed. Data Domain's primary technology, the DDX series, is in the form of a virtual tape library (VTL) or secondary disk array that resides between primary storage systems and tape archive systems. As data is scheduled for backup, it moves first to a Data Domain VTL where duplicate copies of data are eliminated and the remaining data either resides on the disk array for a predetermined amount of time or are archived on tape silos.

Data Domain also sells a gateway series of appliances that are aimed at de-duplicating data on third-party Fibre Channel storage arrays as backup applications move the data to tape silos.

Both EMC and NetApp have their own forms of data de-duplication. NetApp's A-SIS de-duplication product -- once sold as a standalone product -- is offered as part of the Data OnTap operating system that runs the company's network-attached storage arrays, considered a form of primary storage de-duplication.

EMC sells its Avamar appliance product, which it obtained when it bought Avamar Inc.for $165 million in 2006. That product is aimed at de-duplicating data as it moves from application servers to primary storage arrays. The company also sells the DL4000 virtual tape library, a disk array that runs re-branded software from FalconStor Software Inc. Tucci said the company's two VTL products would complement each other, and he did not plan to discontinue the existing DL-series.

NetApp's CEO said his company's offer for Data Domain is "superior to EMC's previously announced, unsolicited proposal," because the two company's technologies are more complementary, and it is an "opportunity for Data Domain shareholders to participate in the future success of the combined NetApp and Data Domain entity."

"The cultural compatibility between Data Domain and NetApp will maximize the potential for continued innovation from a creative and motivated employee base. This will not only create a meaningful choice for our customers but also lead to a complementary combination with no obstacles to an expeditious close of the acquisition," Warmenhoven said.

This story, "Bidding war: NetApp counters EMC for Data Domain with $1.9B offer" was originally published by Computerworld.

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