Data Domain/EMC/NetApp: the Serial Continues

In less than three hours, each of the three companies, Data Domain, Inc., EMC Corp. and NetApp, Inc. published their own press release concerning the acquisition of the de-dupe company.

June 15, 2009, 9:26 am EDT
Data Domain’s Board of Directors Recommends Stockholders Reject EMC’s Unsolicited Tender Offer
at This Time

Data Domain announced that its Board of Directors, after careful consideration with its outside financial advisor and legal counsel, recommends that Data Domain stockholders reject EMC Corporation’s offer to acquire all of the outstanding shares of Data Domain common stock for $30.00 per share in cash and not tender their shares of common stock to EMC pursuant to EMC’s offer at this time. The basis for the Board’s recommendation is set forth in Data Domain’s Schedule 14D-9 filed today with the Securities and Exchange Commission.

At this time, the Board reaffirms its recommendation that Data Domain’s stockholders vote in favor of the adoption of the revised merger agreement with NetApp, Inc.that is described in the Registration Statement on Form S-4 that NetApp has filed with the Securities and Exchange Commission. As previously announced, on June 3, 2009, Data Domain and NetApp entered into a revised merger agreement under which NetApp will acquire all of the outstanding shares of Data Domain common stock for a combination of cash and stock. Based on NetApp’s closing stock price on June 12, 2009, the transaction would be valued at $30 per share, or approximately $1.9B, net of Data Domain’s cash.

"Our Board is committed to enhancing stockholder value and, after careful review with our outside advisors, determined that the $30 per share EMC Offer is not in the best interests of our stockholders at this time," said Frank Slootman, president and CEO of Data Domain. "We are pleased with the revised terms of NetApp’s acquisition offer and feel it will provide great value to our shareholders and customers."

In reaching its determination to recommend that the Company’s stockholders reject EMC’s offer at this time, Data Domain’s Board considered a number of factors in consultation with Data Domain management and its legal and financial advisors, including, but not limited to, the following:

• Terms of the Merger Agreement with NetApp – The merger agreement with NetApp represents a binding, negotiated commitment of both Data Domain and NetApp, pursuant to which Data Domain’s failure to reject EMC’s offer and/or reaffirm the recommendation of Data Domain’s Board that the Data Domain stockholders vote for the adoption of the merger agreement with NetApp would give NetApp the ability to terminate the merger agreement immediately and, in that event, Data Domain would no longer have a commitment from NetApp to acquire Data Domain and would have no assurance that EMC would complete its offer;
• Lack of Ability to Negotiate Terms of EMC’s offer – Data Domain has been unable to engage in discussions or negotiations with EMC with respect to its offer because EMC has not yet agreed to enter into the form of confidentiality and ‘standstill’ agreement required by the merger agreement with NetApp as one of the pre-conditions to any discussions or negotiations with a third party;
• Conditional Nature of EMC’s offer – EMC is not required to accept for payment or pay for any shares of Data Domain common stock, and may terminate or amend its offer, at any time before the expiration date of its offer (June 29, 2009) if any of the following conditions, among others, have not been met:
• there being validly tendered and not withdrawn before the expiration of EMC’s offer a number of shares of Data Domain common stock which, together with the shares of common stock then owned by EMC and its subsidiaries, representing at least a majority of the total number of shares of common stock outstanding on a fully diluted basis;
• EMC being satisfied, in its reasonable discretion, that the merger agreement with NetApp has been terminated;
• that a definitive merger agreement, in a form satisfactory to EMC in its reasonable discretion has been executed;
• EMC being satisfied, in its reasonable discretion, that the provisions of Section 203 of the Delaware General Corporation Law do not apply to or otherwise restrict its offer; and
• any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, or any similar waiting periods under any applicable foreign statutes or regulations, having expired or been terminated; at this time, none of the waiting periods have expired or been terminated, and it is not possible to determine at this time whether the relevant antitrust authorities will require additional information, challenge the consummation of EMC’s Offer or impose any additional conditions on the consummation of the offer, any of which could significantly delay or impede consummation of the offer, particularly in light of the fact that under the terms of the EMC’s proposed merger agreement, EMC would not be required to contest any such challenge or accept any such conditions, and would not be obligated to provide Data Domain any compensation if this resulted in the failure of the offer; and
• Costs of Accepting EMC’s offer – If Data Domain were to enter into a merger agreement with EMC and terminate the merger agreement with NetApp, then Data Domain would be required, in most circumstances, to pay NetApp a $57 million termination fee and will have, in all circumstances, incurred considerable transaction expenses, in each case regardless of whether Data Domain consummates a transaction with EMC, which fee and expenses would not be reimbursed or otherwise paid by EMC under the terms of EMC’s proposed merger agreement if Data Domain is unable to consummate a transaction with EMC.

The foregoing discussion of the material factors considered by Data Domain’s Board is not intended to be exhaustive. In view of the variety of factors considered in connection with its evaluation of EMC’s offer and the pending merger with NetApp, the Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the factors summarized above in reaching its recommendation. In addition, individual members of Data Domain’s Board may have assigned different weights to different factors.

Qatalyst Partners is serving as financial advisor and Fenwick & West LLP is serving as legal counsel to Data Domain.

June 15, 2009, 10:53 am EDT

EMC Reiterates Its $30 Per Share All-Cash Tender Offer
to Acquire Data Domain is Superior

EMC Corporation reiterated that its all-cash offer to acquire all outstanding common stock of Data Domain, Inc. for $30.00 per share is superior to the NetApp part-stock counter offer.

Joe Tucci, EMC Chairman, President and CEO, said: "We believe that EMC’s $30 all-cash offer is superior and delivers to Data Domain price certainty and price protection as well as the ability to close promptly. We note that, as indicated in NetApp’s June 3rd Form S-4 filing, Data Domain communicated to NetApp that ‘price certainty and protection against fluctuations [in] NetApp’s common stock were important to Data Domain.’ We also note that on several occasions, Data Domain requested NetApp to increase the cash portion of its offer as well as the range of the collar."

Tucci added: "EMC’s all-cash offer meets all of Data Domain’s stated objectives. We do not believe that Data Domain stockholders will approve the proposed transaction with NetApp. EMC remains committed to successfully completing this transaction."

As previously disclosed, EMC will use existing cash balances to finance the transaction.

June 15, 2009, 11:53 am EDT
NetApp Comments on Data Domain’s Recommendation That Stockholders Reject EMC’s Offer
and Vote in Favor of the Merger With NetApp

NetApp responded to Data Domain’s announcement that its board of directors has recommended that Data Domain stockholders reject EMC Corporation’s offer to acquire all of the outstanding shares of Data Domain common stock, not tender their shares to EMC pursuant to EMC’s offer, and vote in favor of the merger with NetApp.

"We are very pleased with Data Domain’s recommendation that stockholders continue to support NetApp’s merger proposal over EMC’s unsolicited offer," said Dan Warmenhoven, chairman and CEO of NetApp. "This announcement reaffirms our belief that the NetApp proposal provides attractive short- and long-term value to Data Domain stockholders with no significant antitrust concerns and a clearer and more timely path to close. We look forward to proceeding with our proposal, bringing the offer to a stockholder vote, and beginning to execute on the promise of this compelling combination."

"Importantly, we believe a combination of NetApp and Data Domain brings significant benefits to customers and employees," continued Warmenhoven. "In our merger, we believe customers will benefit from a lower risk of business disruption, continued competition, an enhanced products and services offering, and the ability of the NetApp sales and marketing organization to bring Data Domain’s products to more enterprises in the United States and to more customers in Europe and Asia. Furthermore, we believe employees will benefit from cultural compatibility and the ability to accelerate productivity and innovation given the existence of complementary products and a larger base of resources."

NetApp first announced its definitive agreement to acquire Data Domain on May 20, 2009, and announced its revised acquisition agreement on June 3, 2009.