UPDATE 4-Data Domain picks NetApp over EMC as war heats up

* Data Domain agrees to NetApp's revised $30/shr offer

* EMC starts buying Data Domain shares under tender offer

* Data Domain shares up 3 percent
(Recasts first sentence, updates shares, adds comments from
interview, details on new agreement, adds NEW YORK to dateline)

By Jim Finkle and Anupreeta Das

BOSTON/NEW YORK, June 3 (Reuters) - Coveted data storage
company Data Domain Inc (DDUP.O) signed a new agreement to sell
itself to NetApp Inc (NTAP.O) for $30 a share, rejecting a
similar bid from EMC Corp (EMC.N) and raising the stakes in a
rare bidding war.

EMC said on Wednesday that it had started buying up stock in
Data Domain, claiming its $30-a-share offer was superior.

Bidding wars have been rare over the course of the recession
as acquisition activity has slumped and companies have refused
to overpay for businesses.

Even when Oracle Corp (ORCL.O) unexpectedly signed a deal to
buy Sun Microsystems Inc (JAVA.O) in April, there was no
counter-bid from rival IBM (IBM.N), which had been negotiating
for weeks to buy Sun.

But data storage is a hot area in the technology sector, as
increasing use of the Internet forces companies to search for
more efficient ways to store huge amounts of information.

Data Domain is coveted because it has a technology that
helps get rid of redundant data that consumes space in
computers. It is one of the fastest-growing segments in
storage.

NetApp and EMC also sell this so-called data deduplication
technology, though they earn the bulk of their revenue from
traditional data storage equipment without those features.

DEAL MAKER

NetApp, one of the top makers of data storage equipment, and
Data Domain said their cash-and-stock deal was worth $1.9
billion, net of cash and subject to adjustments. NetApp
initially agreed to buy Data Domain for $25 per share in cash
and stock, or $1.5 billion, on May 20.

NetApp argues that EMC may have trouble winning antitrust
clearance for an acquisition of Data Domain because their
products overlap, a claim that EMC denies.

Jay Kidd, chief marketing officer for NetApp, said in an
interview with Reuters that he is confident his company would be
able to win regulatory clearance more quickly than EMC.

"They are going to have too many products in the same space.
Some of them would have to be ended," he said.

NetApp upped its offer just two days after EMC, the world's
biggest maker of corporate data storage equipment, sought to top
NetApp with a $30 per-share bid, all in cash, that it said was
worth $1.8 billion net of cash.

It was not immediately clear why the two companies provided
different calculations for the total value of their $30 per
share offers.

Tom Burnett, director of research with Wall Street Access,
said that more offers could follow from both suitors.

"There is no guarantee that EMC will come back with a $32
cash. But it's unlikely they only had one bid in their pocket,"
he said.

If EMC makes a higher offer, NetApp potentially has room to
come back with an even higher stock-and-cash offer. "They've got
some fire power," Burnett added.

Officials with EMC could not be reached to comment on
whether the company would make another offer for Data Domain.

Data Domain shares rose 3 percent to $32.54 in Nasdaq
trading, suggesting that investors believe EMC or another suitor
will respond with a higher bid. They were little changed after
it announced the revised deal with NetApp.

They have soared 82 percent since Data Domain agreed to sell
itself to NetApp last month.

NetApp fell 4 percent to $18.57 while EMC dropped 3 percent
to $12.48.
(Reporting by Jim Finkle in Boston, Anupreeta Das in New York
and S. John Tilak in Bangalore; Editing by Derek Caney)