Update: EMC bids $1.8 billion for Data Domain

EMC has been interested in Data Domain for some time

EMC on Monday moved to head off NetApp's proposed acquisition of data de-duplication vendor Data Domain, offering about US$1.8 billion compared with NetApp's May 20 bid of $1.5 billion.

The dominant storage vendor plans to combine Data Domain's data de-duplication technology with its own to tap into the growing market for data de-duplication, an archiving technology that eliminates duplicate bits of information to use storage capacity more efficiently.

EMC proposed offering $30 per share from its existing cash reserves for Data Domain. It would run the acquired company as a division of EMC and increase research and development investment, EMC Chairman, President and CEO Joe Tucci said on a conference call to discuss the offer.

"This acquisition is all about accelerating growth," Tucci said.

EMC believes it can speed up Data Domain's revenue growth and expects combined revenue from Data Domain's products and EMC's DL4000 disk library and Avamar backup products to exceed $1 billion in 2010, Tucci said.

Data Domain's data de-duplication products are the world's best for de-duplicating at the backup target, or the location where the data resides after backup, Tucci said.

They complement EMC's own data de-duplication products, which are the best at the source, or where data is prepared before sending to a backup platform, he said.

Source de-duplication can help enterprises conserve network capacity between a branch office and a central data store, while target de-duplication offers greater flexibility on how and when it is carried out.

In a letter Monday to Data Domain, which EMC made public, Tucci said his company was disappointed that it wasn't given a chance to talk about a deal before the NetApp proposal was announced, "particularly because I believe you should have been aware of our interest," Tucci wrote.

Because the offer is for all cash, versus NetApp's bid of cash and stock, it offers Data Domain shareholders a greater certainty of value, the letter said.

EMC has been interested in Data Domain for some time, Tucci said on the conference call. EMC could have built the capabilities Data Domain has, but an acquisition would let it get those out to market sooner, he said.

Because of stipulations in NetApp's pending deal with Data Domain, EMC hasn't been able to talk to Data Domain recently, Tucci said, but he expressed confidence that EMC will prevail.

"Once they get to know us, the rhetoric will go away and the substance will come to play," Tucci said.

Data Domain declined to comment on the EMC offer. NetApp officials could not immediately be reached for comment.

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