The bidding war for Data Domain between EMC and NettApp escalated yesterday after EMC once again raised its all-cash offer from $1.8 billion to $2.1 billion, outbidding NetApp's revised stock and cash offer of $1.9 billion.

Not waiting for the expiry of its 10 July extension for the $30 per share offer valuing Santa Clara, California-based Data Domain at approximately $1.8 billion, (See: EMC Corp extends Data Domain offer period to 10 July) EMC, increased its offer yesterday to $33.50 per share in cash, taking the total enterprise value to approximately $2.1 billion.

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 is clearly superior to NetApp's revised $30 per share stock-and-cash proposal, valuing Data Domain at $1.9 billion. (See: NetApp ups offer for Data Domain with $1.9 billion)

The Hopkinton-  (Massachusetts) based Fortune 500 company, EMC also said that it is 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 could further impede the maximisation of stockholder value for Data Domain stockholders.

The NetApp offer has a termination fee of $57 million, which Data Domain would have to pay NetApp if it walks away from the deal.

Although Data Domain has not commented on the new offer by EMC, NetApp chief executive Dan Warmenhoven said,  ''The NetApp board of directors will carefully weigh its options, keeping in mind both its fiduciary duty to its stockholders and its disciplined acquisition strategy,'' and added, ''We will provide an update shortly.''

Data Domain has indicated a preference for merging with NettApp since it feels that the merger with EMC would harm the company's business and operations.

Both EMC and NetApp play in the same domain making 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.

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

On 1 June, EMC rivalled and upped the stakes by offering $30 per share in cash, valuing Data Domain at approximately $1.8 billion, net of Data Domain's cash and on 3 June, NetApp responded by making a revised offer to buy Data Domain's common stock for $30 per share in cash and stock.

NetApp has been relying on the possibility of antitrust regulators crying foul of an EMC-Data Domain combination and says its products are more complementary with the back-up technology of Data Domain as compared with EMC's products.

But even as NettApp urged Data Domain's shareholders not to accept EMC's offer as it may fall in the gambit of anti-trust law, the US Federal Trade Commission last week reviewed the applications of both EMC and NettApp to acquire Data Domain and ruled that neither company posed an anti-competitive threat to the marketplace.

According to analysts, EMC may win the race to acquire Data Domain since it is a bigger company than NettApp. EMC's sales last year was $14.8 billion compared to NetApp's $3.4 billion.

EMC also has 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.

Data Domain has called for a special stockholders meeting on 14 August to consider and vote on the NetApp merger proposal, while Data Domain's stockholders have till 17 July to decide whether to sell their shares to EMC or not.