EMC may raise bid for Data Domain
New offer could top $2.1b for California de-duplication firm
Data storage company EMC Corp. of Hopkinton may sweeten its $1.8 billion offer to buy Data Domain Inc., according to a published report.
Citing anonymous sources, the Reuters news agency reported yesterday that EMC will boost the value of its all-cash offer to acquire Data Domain, a Santa Clara, Calif., maker of de-duplication products that help companies eliminate unnecessary copying of files. The Reuters report said EMC might increase its bid to as much as $35 a share from its original $30. That would raise the value of the EMC bid to more than $2.1 billion.
EMC refused to confirm the report. Company spokesman Michael Gallant said EMC's $30-a-share offer is already better than rival NetApp Inc.'s most recent bid. "We already have a superior offer on the table, with more certainty of value for Data Domain shareholders," Gallant said.
Data Domain also declined to comment. NetApp issued a statement warning that "the combination of EMC and Data Domain would stifle competition, is fraught with regulatory risk, and could lead to job loss and business disruption."
On May 20, NetApp of Sunnyvale, Calif., agreed to buy Data Domain for $1.5 billion in cash and stock. On June 1, EMC made an all-cash offer of $30 a share, or $1.8 billion. NetApp increased its offer to $1.9 billion.
The Data Domain board accepted the improved NetApp offer, but said it would evaluate the EMC bid. The Data Domain board is expected to disclose its recommendation on Tuesday.
Rajesh Ghai, storage sector analyst with ThinkEquity Partners LLC in San Francisco, said an EMC bid of $33 would probably put Data Domain out of NetApp's reach.
But he added that EMC might go higher to offset concerns among Data Domain shareholders that the EMC purchase might be blocked by antitrust regulators.
EMC, the world leader in high-end data storage systems, already has a line of de-duplication products, and acquiring Data Domain could ensure its dominance in the market. Ghai predicted that regulators won't block an EMC acquisition.
"I don't think NetApp has too strong a case that these guys are going to create a monopoly situation," he said.
But Ghai said that EMC might bid $35 a share to mollify worried Data Domain shareholders.
EMC shares closed up 18 cents yesterday, at $13.26 on the New York Stock Exchange. NetApp rose 22 cents to $20.14, and Data Domain was up 24 cents to $33.50, both on the Nasdaq stock exchange.
Hiawatha Bray can be reached at bray@globe.com. 
