What will EMC's next offer be?

Data Domain's board just approved Netapp's new offer.

OK - it looks like they really want to work for kind, friendly local Netapp people instead of joining hostile rough and tumble hoard at EMC .

However, there is the matter of shareholder approval, which is likely to be thorny because the institutional investors who hold a lot of DDUP's stock might not be all that sympathetic to the employee shareholders' desires.  Cash speaks to finance people and they are measured on their investment return and not DDUP employee job satisfaction. 

Everybody expects EMC to raise its offer, tempting accusations of lunacy.

OK EMC, it's your move.  You've been matched, are you going to increase the pressure?

Comments

[Andrew Storrs]

EMC will probably just up their offer by a few hundred million or so (still all cash) and let the shareholders decide. I think we all know which offer they'll go for.

[marc farley]

Thanks Andrew,

It will be interesting won't it? It looks like EMC can clinch the deal for a few measly $200 Million more, but how sane would THAT be?

[Just a Storage Guy]

Don't forget - Any non-ntap offer is technically $57M lower- that's the out penalty for DDUP to go with someone other than NTAP..

[marc farley]

Huh? I don't get it Just a Storage Guy. Could you explain this obligation on DDUP's part?

[Andrew Storrs]

He's referring to the breakup fee (or topper fee) that NetApp and Data Domain agreed to in the initial offer. If DDUP accepts an offer from someone other than NTAP's they have to pay out $57 million. Pretty standard language in acquisitions.

I still say EMC ups their offer by about $200 mil and looks under the couch cushions and on the floor of their car to come up with the $57 mil. :p

I think the real question is which is better for the customer? (thinking here of future customers)

[marc farley]

Thanks Andrew,

For anybody else that might be interested, here's an interesting paper on breakup - or topper - fees.

http://www.kpmg.is/media/fyrirtaekjasvid/Global_MA_Spotlight_Reverse_Break_Up_Fees.pdf

Does anybody know how this would work? Would this $57 Million be paid from the cash proceeds EMC's offer or would this be treated as a liability that would transfer to EMC that they would have to pay Netapp in addition to their offer?

[nate]

I thought this was pretty funny, was watching CNBC earlier this morning and they started talking about the deal, about 4:10 into the video they start asking each other what does data domain do?

http://www.cnbc.com/id/15840232?video=1141650385&play=1