EMC CEO Joe Tucci reached out again to Data Domain today – not to increase his company’s offer but in an open letter telling Data Domain employees they are better off with EMC than rival NetApp.
EMC sought to outbid NetApp for dedupe specialist Data Domain last week with a $1.8 billion offer. That trumped NetApp’s original $1.5 billion bid, but NetApp increased its offer to $1.9 billion last Wednesday. Although both offers are for $30 per Data Domain share, Tucci maintains EMC’s is better because it is all cash while NetApp’s is part cash, part stock. Still, Data Domain’s board recommended that shareholders accept the NetApp bid and said it will comment on EMC’s offer by June 16.
Storage insiders expect EMC to raise its offer if necessary. For now, Tucci wants Data Domain employees to feel they will be welcome if they join EMC.
“There’s more to the success of a merger than money can ever account for,” Tucci wrote in his letter to Data Domain employees.
Tucci pointed to EMC’s track record with acquisitions and its larger sales force and R&D budget than NetApp has as factors that “provide assurance that EMC can grow and develop Data Domain more rapidly and effectively than NetApp can.”
Tucci has made these points before since EMC’s bid, and likely would have made them to Data Domain CEO Frank Slootman if Slootman didn’t cancel a scheduled May 27 meeting with EMC after accepting NetApp’s $1.5 billion offer.
In his letter to Data Domain employees, Tucci said many employees of past acquisitions have risen to “leadership positions” in EMC. He also made it clear how much he respects Data Domain.
“You have built a terrific company,” he wrote. “You have a well-earned reputation for attracting skilled storage professionals who excel at innovation. And we admire how uncompromising you are in caring for and serving your customers. In many ways, you remind of us EMC.”
The entire letter is posted on EMC’s web site.
It’s not clear exactly what Tucci hopes to accomplish with the letter. Data Domain employees won’t decide who buys the company, its shareholders will.
In an email to reporters accompanying a copy of the letter, an EMC spokesman wrote: “Joe chose the open letter format as the best way to express directly to Data Domain employees his thoughts about why EMC is the best choice for them.”
The email also included a reminder that “before signing the definitive agreement with NetApp, Data Domain’s management excluded EMC from consideration as a potential acquirer despite EMC’s attempt at an open dialog. Many outside followers have wondered why the Data Domain Board would not have wanted to create a level playing field for other companies that may have been interested in acquiring Data Domain.”
It’s surprising that Tucci didn’t put that in his letter. Maybe Data Domain employees can read it between the lines.