NetApp today announced it has walked away from a deal to buy out vendor Data Domain after EMC twice outbid it for the deduplication vendor.
After being outbid twice by rival EMC, NetApp today announced that it will not increase its $1.9 billion offer to acquire data deduplication vendor Data Domain, saying the two companies have terminated their merger agreement.
Data Domain has terminated its previously announced merger deal with NetApp. Data Domain paid NetApp a $57 million termination fee under terms of that agreement.
NetApp chairman and CEO Dan Warmenhoven said his company was focused on creating long-term value for its shareholders. "We therefore cannot justify engaging in an increasingly expensive and dilutive bidding war that would diminish the deal's strategic and financial benefits," Warmenhoven said.
In March, NetApp originally offered $1.5 billion in cash and stock for Data Domain. But early last month, EMC -- with its deeper pockets -- came in with an all-cash bid of $1.8 billion for the company. NetApp then increased its bid to $1.9 billion. And yesterday, EMC again countered with a $2.1 billion all-cash offer, this time sweetening the bid by removing any deal-protection provisions, including a deal termination fee.
The bidding war highlighted the intense interest in data de-duplication, which identifies redundant data and deletes it in order to save storage space. As the amount of data enterprises need to store rapidly grows, they are looking for ways to reduce how much storage they have to buy. De-duplication can slash the space requirement for many types of data by more than half, vendors say. Data Domain was a pioneer of this technology, which most storage vendors have in some form today.
Warmenhoven said his company applies a disciplined approach to acquisitions based on producing long-term value for the company's stockholders, and so it was not able to justify "engaging in an increasingly expensive and dilutive bidding war that would diminish the deal's strategic and financial benefits."
"We look forward to continuing to build on our foundation of innovation and customer service, and to continuing to execute our successful growth strategy," he said.