EMC Corporation (EMC), not exactly a household technology name, but one that business knows all too well as the company is involved in various lines of business supporting technology infrastructure and storage all around the world. The company has turned itself into a healthy income generator providing solutions for businesses in the areas of Information Storage, Information Management and Security.
Most notably for EMC of late has been its attempt to expand its reach over the IT crowd, including, but certainly not limiting to simply protecting its position against the blue-chip Tech giants of today. It spun off a piece of popular virtualization company
VMWare (VMW) into an IPO two years ago and now for its latest move has set it sights on winning a bidding war for specialized storage company
Data Domain (DDUP). On the other end of the table is NetApp (NTAP), a firm very much in the same corporate storage business that EMC wants to dominate.
With Data Domain initially accepting an offer from NetApp for $1.9Billion, EMC countered with something similar offering $30/share in late May, which now has been bumped to $33.50/share. An enterprise value of $2.1Billion, which is calculated by the $2.4Billion offer price, minus nearly $300Million of Data Domain cash. Traders think the last has yet to be seen in this back and forth, as shares of DDUP continue to climb being pushed to $34 in today's market.
Data Domain the takeover play? Certainly, with both companies having gone back and forth already, it'll be interesting to see how much value NetApp has put on the company. Will there be another bid, or as analysts seem to think, is this it and has EMC sealed the deal?
Lots of questions, but if the traders, and not the analysts, are to be believed this one isn't over. With major markets settling down after an astounding bump from the lows in March, this acquisition story is an opportunity in the tech sector, and one that investors should watch closely. I believe NetApp will think long and hard about it, and if there's another move from the other side, EMC will move in for $37 and cement its grip on the world of specialty corporate storage.
Winning the bid for Data Domain solidifies an already strong corporate technology business for EMC, and with virtualization wildly seen as the now and the future of cost savings in Information Technology, EMC is in the drivers seat of a major stock ramp up at the first concrete signs of economic normalcy. In the $12-$13 range its still the underrated, and the unsung hero of technology names to own.
Disclosure: Author holds no position in any company mentioned.
