Information infrastructure technology giant EMC has beaten rival NetApp yesterday to acquire Data Domain for $2.1 billion in the month-long bidding war.

Santa Clara-based Data Domain, with 2008 sales at $274 million, said yesterday that it had entered into a definitive merger agreement with EMC Corporation.

''Pursuant to the definitive merger agreement with EMC and consistent with the tender offer previously commenced by EMC, EMC will acquire all of the outstanding shares of Data Domain common stock for $33.50 per share in cash,'' the company said in a statement.

The acquisition is expected to be neutral to EMC's non-GAAP earnings per share in its fiscal year 2009 and accretive to its non-GAAP earnings per share in fiscal year 2010. 

EMC's all-cash tender offer commenced on June 2 and is scheduled to expire at 12:00 midnight Eastern Daylight Time on July 17, 2009, subject to customary tender offer conditions being satisfied.

In the end, it was the financially stronger EMC that won the acquisition. EMC had far greater resources to acquire Data Domain as it has nearly three times the cash-at-hand or short term investments with $7.25 billion, compared to NetApp's $2.6 billion, of which, nearly 52 per cent is tied up internationally.

In 2008, EMC reported sales of $14.8 billion last year with profits of $1.3 billion, compared to NetApp's $3.4 billion sales.

Data Domain also announced today that it has paid NetApp a $57 million termination fee under the terms of the previously announced merger agreement, a pre-condition that EMC had put forward.

''This is a compelling acquisition from both a strategic and financial standpoint," Joe Tucci, EMC chairman, president and CEO, said in a statement.

Tucci said, "We look forward to bringing Data Domain together with EMC to form a powerful force in next-generation disk-based backup and archive. I have tremendous respect for Data Domain's people, technology and business, and anticipate great things ahead for our respective companies, our customers and partners.''

The bidding war began on 20 May, when the Sunnyvale-based NetApp proposed to acquire all of the outstanding shares of Data Domain common stock for $25 per share in cash and stock, valuing Data Domain at $1.5 billion.

On 1 June, EMC, raised the stakes in a rival $30 per share cash offer, valuing Data Domain at approximately $1.8 billion, net of Data Domain's cash.

NetApp escalated the bidding war on 3 June, increasing its offer for Data Domain for $30 per share in cash and stock, valuing the company at $1.9 billion.(See: NetApp ups offer for Data Domain with $1.9 billion), which Data Domain accepted.

This week, the Hopkinton-(Massachusetts) based Fortune 500 company, EMC upped the stakes by raising its all-cash offer from $1.8 billion to $2.1 billion. (See: EMC escalates bidding war for Data Domain with $2.1-billion offer)

In submitting its revised proposal to Data Domain's board of directors, EMC, the world's largest data storage company, emphasised that its all-cash offer was clearly superior to NetApp's revised $30 per share stock-and-cash proposal, valuing Data Domain at $1.9 billion.

EMC also had said that it was prepared to close the transaction within two weeks, which is almost a month faster than the NetApp proposal and further added that it would remove the break-up fee and other deal protection clauses in the revised offer that would further improve the maximisation of stockholder value for Data Domain stockholders.

Both EMC and NetApp play in the same domain making of hardware and software that allows companies to store, manage and back up their data. They are interested in Data Domain's technology because it eliminates duplicate data during back-up processes, which lets companies save top dollar in costly storage space.

Following the completion of the acquisition, which is expected to close before the end of July, Data Domain will help accelerate EMC's pace of expansion and leadership in the fast-growing next-generation disk-based backup and archive marke.

Data Domain has now cancelled its special meeting of stockholders scheduled for August 14, 2009 to consider and vote on the NetApp merger proposal.