July 10, 2009 -- The experts are weighing in on EMC's pending acquisition of Data Domain and questions abound. Did EMC pay too much? How will it juggle its many data deduplication offerings? Did NetApp make the right move?
The price tag was just too high. EMC forced NetApp to bow out of its acquisition agreement with Data Domain earlier this week after upping the ante to $2.1 billion.
According to some analysts, this may have been a blessing in disguise for NetApp.
"NetApp just forced EMC to spend [more than $2 billion] for an asset that really doesn't fit and that EMC didn't want until it thought NetApp would get Data Domain," says David Vellante, co-founder and contributor to The Wikibon Project. "EMC-ers believe that dedupe is best done at the source. It's a culture clash of a serious nature."
Vellante believes NetApp's interest in acquiring Data Domain was based on the potential impact it could have on the bottom line.
"NetApp wanted Data Domain because it saw Data Domain as the path of least resistance to $5 billion in revenue. Personally, I think there are better ways to get there," he says.
Vellante's opinion echoes that of Enterprise Strategy Group (ESG) founder and senior analyst Steve Duplessie.
"I think the price was too high to begin with and nuts by the end," says Duplessie. "I think NetApp would have enjoyed a lot of synergies and opportunity with Data Domain, but at that price, there was simply no margin for error. I think it would have strapped them and put an unnecessary microscope on their every move that would deflect from the fact that they are a great company. I think they will be happy with their decision."
Now, he says, EMC will be under that microscope.
"EMC has more room to maneuver simply because of their size and assets, but that doesn't mean they won't be under the microscope. That's a mongo big price to pay for anyone to simply ignore it. They certainly have the muscle and brains to make it work, but it won't be easy," says Duplessie.
Friday, July 10, 2009
Monday, July 6, 2009
EMC raises bid as NetApp gets green light from regulators
July 6, 2009 -- If you thought EMC was out of the race for Data Domain – think again. Just as NetApp announced this morning that it has received the go ahead from federal regulators to take its acquisition proposal to a stockholder vote, EMC once again raised its offer to acquire Data Domain. The EMC bid now stands at more than $2 billion.
The Data Domain Board of Directors currently plans to hold a meeting of stockholders and a merger vote on August 14. EMC is hoping to spoil the party by forcing Data Domain’s stockholders to take a long, hard look at its latest offer.
Under its revised proposal, EMC has increased its offer to acquire all the outstanding common stock of Data Domain to $33.50 per share in cash, for a total value of approximately $2.1 billion, net of Data Domain’s cash. NetApp’s offer is currently $1.9 billion.
EMC CEO Joe Tucci outlined the offer today in a letter to Data Domain’s Board Chairman, Aneel Bhusri. Here is the full text of Tucci’s letter:
Dear Aneel:
On behalf of EMC, I am pleased to submit to you and your Board of Directors this revised proposal to acquire all outstanding Data Domain common stock for $33.50 per share in cash. This price represents a substantial premium to the cash and stock proposal of NetApp and is a Superior Proposal as defined in your merger agreement with NetApp. The Board of Directors of EMC has unanimously approved this proposal.
As with our prior proposal, EMC’s revised proposal is not subject to any financing or due diligence contingency, and we will use existing cash balances to finance the transaction. In addition, we have received all necessary regulatory approvals. We are amending our currently outstanding tender offer to acquire all of the outstanding shares of Data Domain to reflect our higher price.
We enclose a revised definitive agreement that has been executed on behalf of EMC and which reflects our new $33.50 per share, all cash offer. This agreement is substantially identical to the NetApp proposal except as to the fact that the EMC offer:
-- Is materially higher in price;
-- Reflects our faster two-step structure, which will enable you to close almost a month faster than under the NetApp proposal; and,
-- Very importantly, eliminates all deal protection provisions that could further impede the maximization of stockholder value, including the no solicitation section and the break-up fee obligation.
This last point is very significant to you and your stockholders. Data Domain does not have any justification for continuing deal protection provisions for NetApp or any other party given our willingness to proceed without them. It was questionable agreeing to deal protections in your initial agreement with NetApp, when you knew of our interest in acquiring the company. There is no basis for continuing with them now.
We strongly believe that the Data Domain Board of Directors should pledge to eliminate all deal protection provisions that could further impede maximizing stockholder value. Such a commitment would be the proper exercise of the Board's fiduciary duties to secure a transaction in the best interests of Data Domain stockholders, particularly in light of the EMC proposal described in this letter.
With the early termination last week of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 concluding all regulatory conditions to this transaction, EMC could be in a position to close this transaction and deliver cash to your stockholders in as little as two weeks.
In comparison to your proposed transaction with NetApp, EMC’s proposal represents a far superior alternative for your stockholders.
EMC’s proposal provides higher absolute value for each Data Domain share.
As an all-cash offer, EMC’s proposal offers greater certainty of value.
EMC’s definitive agreement does not contain deal protection provisions that could further impede the maximization of stockholder value – including any termination fee – and is more favorable to the stockholders of Data Domain.
EMC’s transaction offers a faster time to close of almost a month.
We continue to believe that a business combination with EMC will deliver substantial and superior benefits to your company’s stockholders, customers, employees and partners. Since June 1st, when we submitted to you our prior proposal, we have received wholehearted support from many of your stockholders and customers validating our confidence in these benefits.
We encourage you to accept the merits of our proposal and look forward to your execution of the definitive agreement enclosed.
Very truly yours,
Joseph M. Tucci
Chairman, President and Chief Executive Officer
EMC Corporation
Further details on EMC’s latest offer are available on EMC’s website.
The Data Domain Board of Directors currently plans to hold a meeting of stockholders and a merger vote on August 14. EMC is hoping to spoil the party by forcing Data Domain’s stockholders to take a long, hard look at its latest offer.
Under its revised proposal, EMC has increased its offer to acquire all the outstanding common stock of Data Domain to $33.50 per share in cash, for a total value of approximately $2.1 billion, net of Data Domain’s cash. NetApp’s offer is currently $1.9 billion.
EMC CEO Joe Tucci outlined the offer today in a letter to Data Domain’s Board Chairman, Aneel Bhusri. Here is the full text of Tucci’s letter:
Dear Aneel:
On behalf of EMC, I am pleased to submit to you and your Board of Directors this revised proposal to acquire all outstanding Data Domain common stock for $33.50 per share in cash. This price represents a substantial premium to the cash and stock proposal of NetApp and is a Superior Proposal as defined in your merger agreement with NetApp. The Board of Directors of EMC has unanimously approved this proposal.
As with our prior proposal, EMC’s revised proposal is not subject to any financing or due diligence contingency, and we will use existing cash balances to finance the transaction. In addition, we have received all necessary regulatory approvals. We are amending our currently outstanding tender offer to acquire all of the outstanding shares of Data Domain to reflect our higher price.
We enclose a revised definitive agreement that has been executed on behalf of EMC and which reflects our new $33.50 per share, all cash offer. This agreement is substantially identical to the NetApp proposal except as to the fact that the EMC offer:
-- Is materially higher in price;
-- Reflects our faster two-step structure, which will enable you to close almost a month faster than under the NetApp proposal; and,
-- Very importantly, eliminates all deal protection provisions that could further impede the maximization of stockholder value, including the no solicitation section and the break-up fee obligation.
This last point is very significant to you and your stockholders. Data Domain does not have any justification for continuing deal protection provisions for NetApp or any other party given our willingness to proceed without them. It was questionable agreeing to deal protections in your initial agreement with NetApp, when you knew of our interest in acquiring the company. There is no basis for continuing with them now.
We strongly believe that the Data Domain Board of Directors should pledge to eliminate all deal protection provisions that could further impede maximizing stockholder value. Such a commitment would be the proper exercise of the Board's fiduciary duties to secure a transaction in the best interests of Data Domain stockholders, particularly in light of the EMC proposal described in this letter.
With the early termination last week of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 concluding all regulatory conditions to this transaction, EMC could be in a position to close this transaction and deliver cash to your stockholders in as little as two weeks.
In comparison to your proposed transaction with NetApp, EMC’s proposal represents a far superior alternative for your stockholders.
EMC’s proposal provides higher absolute value for each Data Domain share.
As an all-cash offer, EMC’s proposal offers greater certainty of value.
EMC’s definitive agreement does not contain deal protection provisions that could further impede the maximization of stockholder value – including any termination fee – and is more favorable to the stockholders of Data Domain.
EMC’s transaction offers a faster time to close of almost a month.
We continue to believe that a business combination with EMC will deliver substantial and superior benefits to your company’s stockholders, customers, employees and partners. Since June 1st, when we submitted to you our prior proposal, we have received wholehearted support from many of your stockholders and customers validating our confidence in these benefits.
We encourage you to accept the merits of our proposal and look forward to your execution of the definitive agreement enclosed.
Very truly yours,
Joseph M. Tucci
Chairman, President and Chief Executive Officer
EMC Corporation
Further details on EMC’s latest offer are available on EMC’s website.
Thursday, July 2, 2009
EPA seeks feedback on Energy Star storage specification
July 2, 2009 -- What will your refrigerator soon have in common with your storage array? It's not the crisper drawer. Well, not yet anyway. Someone could roll out a new unified SAN/NAS/Frigidaire system that stores your data and your produce. I guess anything is possible. What I'm talking about is the Energy Star program.
The Environmental Protection Agency (EPA) has begun work on a specification framework that will ultimately result in an energy efficiency program for enterprise storage systems. Translation: Energy Star stickers will eventually appear on your favorite storage devices.
Not to pat myself on the back, but this humble reporter predicted an Energy Star program for enterprise storage products a while back. I just didn't think it would take this long.
The specification is in draft form, but the EPA needs a little help with developing the framework. For example, David Floyer raises a key issue in his Wikibon blog. The EPA isn't considering software. He writes:
"Action Item: EPA should include software functionality in its specification for achieving Energy Star. This would allow a far more aggressive energy savings to be set as a standard for Energy Star certification. The vendor should be given the choice of how to achieve these energy savings against the base of a storage array with no software and poor power supplies. This approach will achieve higher levels of savings and enhance the EPA energy star brand."
Last call for comments on the Energy Star Enterprise Storage Draft Specification Framework is tomorrow, July 3. The Wikibon folks are currently collecting and consolidating reader feedback and plan to submit its collective opinion by the end of the week. Get in on the conversation here.
The Environmental Protection Agency (EPA) has begun work on a specification framework that will ultimately result in an energy efficiency program for enterprise storage systems. Translation: Energy Star stickers will eventually appear on your favorite storage devices.
Not to pat myself on the back, but this humble reporter predicted an Energy Star program for enterprise storage products a while back. I just didn't think it would take this long.
The specification is in draft form, but the EPA needs a little help with developing the framework. For example, David Floyer raises a key issue in his Wikibon blog. The EPA isn't considering software. He writes:
"Action Item: EPA should include software functionality in its specification for achieving Energy Star. This would allow a far more aggressive energy savings to be set as a standard for Energy Star certification. The vendor should be given the choice of how to achieve these energy savings against the base of a storage array with no software and poor power supplies. This approach will achieve higher levels of savings and enhance the EPA energy star brand."
Last call for comments on the Energy Star Enterprise Storage Draft Specification Framework is tomorrow, July 3. The Wikibon folks are currently collecting and consolidating reader feedback and plan to submit its collective opinion by the end of the week. Get in on the conversation here.
Thursday, June 18, 2009
TIP: SRM tech making a comeback
June 18, 2009 – According to the most recent Storage Study from independent research firm TheInfoPro (TIP), storage resource management (SRM) tools are in the midst of a comeback as enterprises attempt to boost utilization in tough economic times.
TheInfoPro's most recent study, which is based on data gathered from interviews with 250 IT pros at Fortune 1000 and medium-sized enterprise organizations, revealed that managing storage growth, capacity forecasting and storage reporting, and managing costs are the "top pain points" facing end users.
Enter: SRM.
A few tidbits from a press release on TIP's latest Storage Management Technology Heat Index – a barometer of the user needs and planned spending:
• Top technologies on the F1000 Storage Management Technology Heat Index include capacity planning and forecasting, storage performance monitoring and storage resource management – with capacity planning and forecasting jumping nine spots from number 11 six months ago to the number one technology on the index.
• Top technologies on the MSE Storage Management Technology Heat Index include capacity planning and forecasting, information lifecycle management, disk-to-disk and email archiving.
• Top Technologies on the European Storage Management Technology Heat Index include storage resource management, email archiving and thin provisioning.
TheInfoPro's most recent study, which is based on data gathered from interviews with 250 IT pros at Fortune 1000 and medium-sized enterprise organizations, revealed that managing storage growth, capacity forecasting and storage reporting, and managing costs are the "top pain points" facing end users.
Enter: SRM.
A few tidbits from a press release on TIP's latest Storage Management Technology Heat Index – a barometer of the user needs and planned spending:
• Top technologies on the F1000 Storage Management Technology Heat Index include capacity planning and forecasting, storage performance monitoring and storage resource management – with capacity planning and forecasting jumping nine spots from number 11 six months ago to the number one technology on the index.
• Top technologies on the MSE Storage Management Technology Heat Index include capacity planning and forecasting, information lifecycle management, disk-to-disk and email archiving.
• Top Technologies on the European Storage Management Technology Heat Index include storage resource management, email archiving and thin provisioning.
Tuesday, June 9, 2009
Tucci appeals to Data Domain's rank and file
June 9, 2009 -- The acquisition agreement between Data Domain and NetApp precludes EMC from communicating with Data Domain directly, but no one says EMC can't state its case to the public or to Data Domain's employees.
EMC chairman, president and CEO Joe Tucci issued an open letter to Data Domain's personnel this morning in which he praises their achievements, congratulates them for their successes and highlights the impact of their data deduplication technologies are having in data centers across the globe.
He even writes, "In many ways, you remind us of EMC."
Tucci also promises Data Domain's employees an "exciting future" if they should become part of the "EMC family."
All flattery and promises aside, Tucci continues to make the financial argument that EMC's $30 per share all-cash tender offer to acquire all of the outstanding stock of Data Domain is the better deal than NetApp's part-stock, part-cash offer.
It appears that NetApp will win the day and acquire Data Domain, but its sure is fun to watch the day-to-day developments.
The full text of Tucci's open letter to the employees of Data Domain can be found on EMC's website.
EMC chairman, president and CEO Joe Tucci issued an open letter to Data Domain's personnel this morning in which he praises their achievements, congratulates them for their successes and highlights the impact of their data deduplication technologies are having in data centers across the globe.
He even writes, "In many ways, you remind us of EMC."
Tucci also promises Data Domain's employees an "exciting future" if they should become part of the "EMC family."
All flattery and promises aside, Tucci continues to make the financial argument that EMC's $30 per share all-cash tender offer to acquire all of the outstanding stock of Data Domain is the better deal than NetApp's part-stock, part-cash offer.
It appears that NetApp will win the day and acquire Data Domain, but its sure is fun to watch the day-to-day developments.
The full text of Tucci's open letter to the employees of Data Domain can be found on EMC's website.
Thursday, June 4, 2009
Update: Data Domain sides with NetApp
June 4, 2009 -- Another day, another development in the EMC-Data Domain-NetApp saga. Less than 12 hours after NetApp publicly raised its offer to buy Data Domain, the two companies have officially entered into a revised acquisition agreement.
The volleying has been worthy of a match at Roland Garros. NetApp responded to EMC's surprise bid for Data Domain yesterday morning by raising its offer. The price seems to have satisfied Data Domain, for now.
Late yesterday, the pair issued a joint press release stating that they have entered into a revised acquisition agreement under which NetApp will acquire all of the outstanding shares of Data Domain common stock for $30 per share in cash and stock in a transaction valued at approximately $1.9 billion, net of Data Domain's cash.
EMC is standing pat. The company issued a statement of its own on Wednesday, in which Joe Tucci, EMC chairman, president and CEO, said, "EMC's all-cash tender offer remains superior to NetApp's proposed part-stock merger transaction. We are proceeding with our superior cash tender offer, which is not subject to any financing or due diligence contingency. We do not believe that the Data Domain stockholders will approve the merger transaction with NetApp."
Tucci added, "EMC urges the Board of Directors of Data Domain to not take any actions that would further impede a transaction that is a superior alternative for Data Domain's shareholders."
Whether EMC counters the counter offer remains to be seen.
The volleying has been worthy of a match at Roland Garros. NetApp responded to EMC's surprise bid for Data Domain yesterday morning by raising its offer. The price seems to have satisfied Data Domain, for now.
Late yesterday, the pair issued a joint press release stating that they have entered into a revised acquisition agreement under which NetApp will acquire all of the outstanding shares of Data Domain common stock for $30 per share in cash and stock in a transaction valued at approximately $1.9 billion, net of Data Domain's cash.
EMC is standing pat. The company issued a statement of its own on Wednesday, in which Joe Tucci, EMC chairman, president and CEO, said, "EMC's all-cash tender offer remains superior to NetApp's proposed part-stock merger transaction. We are proceeding with our superior cash tender offer, which is not subject to any financing or due diligence contingency. We do not believe that the Data Domain stockholders will approve the merger transaction with NetApp."
Tucci added, "EMC urges the Board of Directors of Data Domain to not take any actions that would further impede a transaction that is a superior alternative for Data Domain's shareholders."
Whether EMC counters the counter offer remains to be seen.
Wednesday, June 3, 2009
NetApp responds to EMC's bid for Data Domain
June 3, 2009 -- The bidding war for Data Domain has begun. NetApp has responded to EMC's surprise offer to buy the company by upping its offer to $1.9 billion and claiming that a combined NetApp-Data Domain has a bigger upside for both companies.
NetApp issued a revised offer this morning, raising the acquisition price to approximately $1.9 billion versus EMC's $1.8 billion offer earlier this week.
In a press release, NetApp's chairman and CEO, Dan Warmenhoven, said his company's "strategic rationale remains the same" and "the complementary nature of the Data Domain and NetApp product lines will result in higher aggregate growth compared to the redundancies that would result with the EMC product line."
Warmenhoven added, "The cultural compatibility between Data Domain and NetApp will maximize the potential for continued innovation from a creative and motivated employee base. This will not only create a meaningful choice for our customers but also lead to a complementary combination with no obstacles to an expeditious close of the acquisition. Therefore, we are as committed to this partnership now as we were when we first announced our intent to acquire Data Domain."
Mum's the word over at Data Domain as they company has yet to comment on the EMC-NetApp tug of war. The industry pundits, however, are keeping a close eye on the back and forth.
Enterprise Strategy Group analyst Lauren Whitehouse wonders whether EMC is just playing the spoiler, especially given its wealth of data deduplication technologies and OEM deals.
"I am having a hard time understanding why EMC wants the Data Domain technology. EMC has deduplication solutions through the Avamar product and its partnership with Quantum. I'm not sure what opportunities there are for technology integration with Avamar and EMC recently made a sizeable investment in Quantum," said Whitehouse. "The company has also promoted the benefits of the being able to replicate between Dell, EMC and Quantum solutions. What statement is EMC making about its investments in Avamar and Quantum by bidding for Data Domain?"
She continued, "Who can better leverage and integrate the Data Domain technology? EMC definitely has a better track record of doing acquisitions and leveraging technology purchases. Without really knowing the motivation for either company's bid, it's hard to judge who will leverage the technology better. It's just not obvious what the intentions are for either bidder. What a rollercoaster ride this has been."
David Vellante, co-founder and contributor to The Wikibon Project, believes EMC may have the edge.
"EMC plays for keeps. It doesn't mess around when it comes to competing. I think if EMC really wants Data Domain it will outbid NetApp for sure," he said.
So what does EMC's unsolicited bid for Data Domain say to the industry? Vellante sees it as a defensive move by EMC.
"It says to me that EMC recognizes it can't grow its core storage business organically and needs to acquire growth," Vellante said. "It says EMC is making a defensive move, albeit an aggressive one, to stop Data Domain from getting in NetApp's hands."
He also believes smaller vendors are fast becoming hot commodities.
"The market is continuing to consolidate and companies like CommVault, FalconStor, Sepaton and even 3PAR and Compellent are worth more today than they were yesterday," Vellante said.
NetApp issued a revised offer this morning, raising the acquisition price to approximately $1.9 billion versus EMC's $1.8 billion offer earlier this week.
In a press release, NetApp's chairman and CEO, Dan Warmenhoven, said his company's "strategic rationale remains the same" and "the complementary nature of the Data Domain and NetApp product lines will result in higher aggregate growth compared to the redundancies that would result with the EMC product line."
Warmenhoven added, "The cultural compatibility between Data Domain and NetApp will maximize the potential for continued innovation from a creative and motivated employee base. This will not only create a meaningful choice for our customers but also lead to a complementary combination with no obstacles to an expeditious close of the acquisition. Therefore, we are as committed to this partnership now as we were when we first announced our intent to acquire Data Domain."
Mum's the word over at Data Domain as they company has yet to comment on the EMC-NetApp tug of war. The industry pundits, however, are keeping a close eye on the back and forth.
Enterprise Strategy Group analyst Lauren Whitehouse wonders whether EMC is just playing the spoiler, especially given its wealth of data deduplication technologies and OEM deals.
"I am having a hard time understanding why EMC wants the Data Domain technology. EMC has deduplication solutions through the Avamar product and its partnership with Quantum. I'm not sure what opportunities there are for technology integration with Avamar and EMC recently made a sizeable investment in Quantum," said Whitehouse. "The company has also promoted the benefits of the being able to replicate between Dell, EMC and Quantum solutions. What statement is EMC making about its investments in Avamar and Quantum by bidding for Data Domain?"
She continued, "Who can better leverage and integrate the Data Domain technology? EMC definitely has a better track record of doing acquisitions and leveraging technology purchases. Without really knowing the motivation for either company's bid, it's hard to judge who will leverage the technology better. It's just not obvious what the intentions are for either bidder. What a rollercoaster ride this has been."
David Vellante, co-founder and contributor to The Wikibon Project, believes EMC may have the edge.
"EMC plays for keeps. It doesn't mess around when it comes to competing. I think if EMC really wants Data Domain it will outbid NetApp for sure," he said.
So what does EMC's unsolicited bid for Data Domain say to the industry? Vellante sees it as a defensive move by EMC.
"It says to me that EMC recognizes it can't grow its core storage business organically and needs to acquire growth," Vellante said. "It says EMC is making a defensive move, albeit an aggressive one, to stop Data Domain from getting in NetApp's hands."
He also believes smaller vendors are fast becoming hot commodities.
"The market is continuing to consolidate and companies like CommVault, FalconStor, Sepaton and even 3PAR and Compellent are worth more today than they were yesterday," Vellante said.
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