Joe Tucci, president and CEO of storage giant EMC, today issued an open letter wooing the employees of Data Domain, a company that has agreed to be purchased by EMC’s bitter rival NetApp.
On May 20, NetApp offered $25 per share to acquire Data Domain in a cash and stock deal. Ten days later on June 1, EMC made its own all-cash offer of $30 per share for Data Domain. This led NetApp to raise its offer to $30 per share two days later. Despite NetApp offering a cash-and-stock deal instead of all cash, shareholders of the target chose to accept NetApp’s deal the next day. So today, Tucci sent his valentine to the employees as a way to sidestep the Data Domain board. When it comes to corporate finance, love letters to employees or shareholders are a sure sign that the deal has turned hostile. Tucci’s letter represents an attempt to convince Data Domain employees that they’d be better off as EMC workers instead of NetApp employees, but the prose leaves a little something to be desired. Tucci is no Cyrano:
As you know, your Board of Directors has a fiduciary responsibility to do what is in the best long-term interests of Data Domain’s stockholders. Looked at purely from a financial perspective, EMC’s $30 per share all-cash tender offer to acquire all of the outstanding stock of Data Domain remains superior to NetApp’s part-stock, part-cash offer. But of course there’s more to the success of a merger than money can ever account for.
Therefore, we imagine that you must be asking yourselves, what kind of future could I expect to have as a member of the global EMC family? The short answer is a great and exciting future — and here’s why:
Tucci argues that marriage to EMC makes sense because it’s offering more money, has experience integrating companies, and is simply a fantastic place to work. The letter may be window dressing for the employees while EMC attempts to win over Data Domain’s shareholders. Data Domain’s board’s quick acceptance of the NetApp offer will still have to be approved by shareholders, which may prefer an all-cash deal. With this letter, Tucci shows EMC isn’t ready to give up. For a sense of why everyone’s fighting over Data Domain, check out Om’s story on its de-duplication technology.