Data Domain Bidding War Heats Up (DDUP, NTAP, EMC)

The war for Data Domain, Inc. (NASDAQ: DDUP) is heating up.  It was first NetApp, Inc. (NASDAQ: NTAP) that offered to buy the company.  Then EMC Corp. (NYSE: EMC) came out with a challenging bid.  Now, NetApp is back with a higher revised buyout offer.  The new offer values Data Domain at $30.00 per share.  Traders believe an all-out bidding war may be about to break out.

NetApp’s first bid was $1.5 billion, or $25.00 per share in cash and stock.  NetApp’s shares had actually risen higher than the official price.  But EMC’s rival bid came in at $1.8 billion, or $30.00 per share.  EMC’s offer was all cash, leaving no price-risk.

The new price for Data Domain common stock is valued at $30.00 per share in cash and stock.  This is listed as a transaction valued at approximately $1.9 billion, which is actually net of Data Domain’s cash and subject to certain adjustments.

There was an analyst call yesterday calling a possible $35.00 peak buyout price.  Shares closed at $31.58 yesterday and are trading up around $32.50 in early trading.  With a premium of this sort, the belief is obviously that the bidding prices are heading higher rather than lower.

NetApp’s shares appear to be trading down close $19.00 in pre-market trading after closing at $19.34 Tuesday.  EMC shares are trading at $12.75 after closing at $12.85 yesterday.

Jon C. Ogg
June 3, 3009