e425
Filed by NetApp, Inc. Pursuant to Rule 425
Under the Securities Act of 1933
And Deemed Filed Pursuant to Rule 14a-12
Under the Securities Exchange Act of 1934
Subject Company: Data Domain, Inc.
Commission File No.: 001-33517
Frequently Asked Questions
NetApp Acquisition of Data Domain
General & Strategy Questions
What have NetApp and Data Domain just announced?
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NetApp has announced its intent to acquire Data Domain for $25.00 per Data Domain common
share in cash and stock or approximately $1.5B fully diluted aggregate value (net of Data
Domains cash). It is anticipated the deal will close within 60-120 days subject to
customary closing conditions including regulatory approval. |
What is the rationale behind the acquisition?
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There are several drivers of this acquisition: |
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Data Domain is a high-growth innovation leader that will
maximize the combined companys growth and market position. Data Domain grew
122% YoY from CY2007 to CY2008. |
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Data Domain expands NetApps reach into new markets and
opportunities adding multi-vendor disk-based backup. NetApp expands
distribution for Data Domain products in EMEA, APAC and many enterprise
accounts. |
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Expansion of ability to capture greater share of the
high-growth opportunity in tape minimization where Data Domain is widely
acknowledged as the leader in Backup Data Reduction / Deduplication (InfoPro
Wave 12, March 2009). |
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Further reinforcement of NetApps leadership position in
storage efficiency, as NetApp is rated #1 in Online Data Reduction /
Deduplication (InfoPro Wave 12, March 2009). |
Why now?
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NetApp is a leading provider of storage and data management. Part of the NetApp growth
strategy is the addition of new product lines that address large incremental opportunities,
including backup systems that minimize the use of tape in a multi-vendor storage
environment. Data Domain has established a leading position in this high-growth market,
and NetApp has market coverage and customer access in geographies in which Data Domain has
had more limited reach. We believe the combination of our companies can drive more
revenue at lower cost than we could do separately. |
What is the Total Available Market that Data Domain addresses?
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Data Domain provides a disk-based alternative to tape for data backup and archive, which
is estimated to be at least $3B according to reports from IDC and The Taneja Group. |
Why is this good for Data Domain?
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NetApp brings to Data Domain a broader worldwide channel that will expand sales in EMEA,
APAC and in Enterprise accounts. NetApp also has a strong, global support infrastructure
that will accelerate deployment of Data Domain products on a broad scale across global
enterprises. NetApp is committed to the future of the Data Domain product line. |
Why is Data Domain revenue incremental for NetApp? You have claimed to be in the disk-based
backup market for a long time.
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NetApp mainly provides integrated backup and data protection for users of NetApp
primary storage. Many of these capabilities are integrated directly into our Data ONTAP
operating system and have been well adopted within our customer base. These capabilities
enable our customers to create a disk tier to protect their data and to minimize tapes
role in the process. |
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Data Domain provides systems designed to serve any primary storage environment,
including EMC and HP, and to enable customers to adopt disk-based backup in order to
minimize tapes role in the process. NetApp has built a niche in this market with our VTL
product, but Data Domain has established a leadership role in this high-growth market with
its deduplication products. As a result, we believe that Data Domain represents a new,
growing, and incremental market opportunity for NetApp. |
Financial Aspects of the Deal
What is the purchase price?
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The price is $25 per Data Domain share or approximately $1.5B in cash and stock (net of
Data Domains cash). |
When do you expect the deal to close?
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We anticipated the deal will close within 60-120 days subject to customary closing
conditions including regulatory approval. |
When will the acquisition be accretive?
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We expect the acquisition to be accretive within 12 months after the close based on
conservative cost synergy assumptions. |
What are your expectations for the revenue and earnings ramp after the Data Domain acquisition
closes?
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The uncertainty in the macro economy makes it difficult to predict. We believe that we
will find revenue synergies, but it is premature to speculate as to the magnitude of those
synergies or the timeframe it will take to recognize them. |
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Customers, Partners, and Market
How will customers benefit from this transaction?
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After the close, NetApp can apply a worldwide sales, support, and service network as
well as broader partner relationships to the delivery and support of the existing Data
Domain products. This will accelerate customer adoption and the broad deployment of Data
Domain products on a worldwide basis. |
Who are some of the customers who have deployed the Data Domain product? What are they using it
for?
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Data Domain customers cut across virtually all vertical industry types, including
automotive, consumer/retail, energy, financial services, government, healthcare, media and
entertainment and telecommunications. The US Army, Lloyds TSB, TiVo, Teck, Ingram
Entertainment, and The New York Mets, all have deployed Data Domain to minimize the cost
and complexity of tape backup in their environments. These case studies are publicly
available on www.datadomain.com. |
Why is this good for Data Domain and NetApp channel partners?
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Data Domain channel partners will benefit from the more robust NetApp Partner Program.
NetApp channel partners will gain access to the Data Domain portfolio to pursue incremental
revenue opportunities. |
Will NetApp support and broaden relationships with Data Domain channel partners?
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After the close, those Data Domain partners who become part of the NetApp Partner
Program will see expanded opportunities from the inclusion of Data Domain products in the
NetApp Partner Program, as well as access to a broader set of NetApp products. |
Can I still purchase Data Domain products from Data Domain until the deal closes?
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Yes. Until the transaction is complete, these products will be offered by Data Domain.
Please contact your existing Data Domain sales representative to assist you, or visit
www.datadomain.com for contact information. NetApp will offer the Data Domain product
line after the deal closes. |
Should Data Domain customers continue to call Data Domain customer support?
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Yes. Until the transaction is complete, Data Domain continues to operate as a separate
business. Data Domain customers should continue to use existing Data Domain contacts for
support, professional services and sales to address immediate and ongoing needs. We will
communicate all changes and transitions well in advance through these familiar channels. |
Should Data Domain customers continue to contact their Data Domain sales representative?
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Yes. Until the transaction is complete, Data Domain continues to operate as a separate
business, and until further advised, customers should rely on existing relationships. |
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Will this acquisition impact any existing project, deployment or services engagements?
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It is not expect that this transaction will impact any existing project, deployment or
services engagement. |
Will training on Data Domain products continue?
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Yes. Until the transaction is complete, Data Domain continues to operate as a separate
business. After the closing, NetApp plans to continue and expand Data Domains existing
education program. |
How does NetApp plan to maintain Data Domains deduplication technology and product expertise?
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Data Domain employees will be integral in the execution of NetApps plans to grow Data
Domains deduplication storage business. |
Product Strategy and Portfolio
Will you continue to ship Data Domains current products? What about the roadmap?
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Yes. NetApp plans to continue to offer the entire Data Domain product line. NetApps
plans to continue to execute on the Data Domain product development direction to address
the scope and scale requirements of large data centers and enterprises. NetApp will say
more about the roadmap after close. |
Will IBM have access to Data Domain products through the NetApp OEM agreement with them?
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Per the NetApp OEM agreement, IBM will have the option to offer these products after the
close. |
People
How will NetApp organize and manage Data Domain after the acquisition?
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We intend to operate Data Domain as a separate product line and development organization
within Product Operations. More details about organization will be available after the
close of the deal. |
What can NetApp and Data Domain do together prior to the close?
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Nothing outside of the scope of the integration team. It is essential that the two
companies continue to operate independently until the transaction closes. |
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About Data Domain
How many employees does Data Domain have and where are they located?
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Data Domain has about 800 employees in Santa Clara, CA, RTP, Princeton, NJ and sales
offices around the world. |
Whom can we contact at Data Domain for their side of the story?
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Contact Edward Luboja at edward.luboja@datadomain.com for all inquiries |
What is Data Domains current revenue?
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Data Domain did $274m in FY08, up 122% over FY07 |
What is Data Domains current margin? profitability? operating expense structure?
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Gross margins are about 72% and Data Domain earned $16.8m of operating profit in FY08 |
Where can I go to learn more about Data Domains products and solutions?
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Prior to close, go to www.Data Domain.com |
How much of Data Domains revenue is US-based versus international?
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About 77% of Data Domains revenue is US, 16% EMEA, 7% APAC |
Who are Data Domains biggest partners? Any who are not current partners with NetApp?
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84% of Data Domains business flows through channel partners. |
Forward-Looking Statements
This document contains forward-looking statements, which involve a number of risks and
uncertainties. NetApp, Inc. (NetApp) and Data Domain, Inc. (Data Domain) caution readers that
any forward-looking information is not a guarantee of future performance and that actual results
could differ materially from those contained in the forward-looking information. All such
forward-looking statements include, but are not limited to, statements about the benefits of
NetApps acquisition of Data Domain, including future financial and operating results, NetApps
plans, objectives, expectations and intentions and other statements that are not historical facts.
The following factors, among others, could cause actual results to differ from those set forth in
the forward-looking statements: the ability to obtain regulatory approvals of the transaction on
the proposed terms and schedule; the failure of Data Domains stockholders to approve the
transaction; the risk that the businesses will not be integrated successfully; the risk that the
cost savings and any other synergies from the transaction may not be fully realized or may take
longer to realize than expected; disruption from the transaction making it more difficult to
maintain relationships with customers, employees or suppliers; and competition and its effect on
pricing, spending, third-party relationships and revenues. Additional factors that may affect
future results are contained in NetApps and Data Domains filings with the SEC, which are
available at the SECs web site http://www.sec.gov. NetApp and Data Domain disclaim any
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obligation to update and revise statements contained in these materials based on new information or
otherwise.
Additional Information and Where to Find It
NetApp plans to file with the SEC a Registration Statement on Form S-4 in connection with the
transaction, and Data Domain plans to file with the SEC and mail to its stockholders a Proxy
Statement/Prospectus in connection with the transaction. The Registration Statement and the Proxy
Statement/Prospectus will contain important information about NetApp, Data Domain, the transaction
and related matters. Investors and security holders are urged to read the Registration Statement
and the Proxy Statement/Prospectus carefully when they are available. Investors and security
holders will be able to obtain free copies of the Registration Statement and the Proxy
Statement/Prospectus and other documents filed with the SEC by NetApp and Data Domain through the
web site maintained by the SEC at www.sec.gov and by contacting NetApp Investor Relations at (408)
822-7098 or Data Domain Investor Relations at (408) 980-4909. In addition, investors and security
holders will be able to obtain free copies of the documents filed with the SEC on NetApps website
at www.netapp.com and on Data Domains website at www.datadomain.com.
Participants in the Acquisition of Data Domain
NetApp, Data Domain and their respective directors, executive officers and certain other members of
management and employees may be deemed to be participants in the solicitation of proxies in respect
of the proposed transaction. Information regarding these persons who may, under the rules of the
SEC, be considered participants in the solicitation of Data Domain stockholders in connection with
the proposed transaction will be set forth in the Proxy Statement/Prospectus described above when
it is filed with the SEC. Additional information regarding NetApps executive officers and
directors is included in NetApps definitive proxy statement, which was filed with the SEC on July
14, 2008, and additional information regarding Data Domains executive officers and directors is
included in Data Domains Annual Report on Form 10-K/A for fiscal year ended December 31, 2008,
which was filed with the SEC on April 30, 2009. You can obtain free copies of these documents from
NetApp or Data Domain using the contact information above.
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