Data Domain picks NetApp over EMC as war heats up

By Jim Finkle and Anupreeta Das

BOSTON/NEW YORK (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.

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