The corporate soap opera between Data Domain and potential suitors NetApp and EMC has a new episode.
Two law firms have launched class action suits against the board of Data Domain, alleging that the process used to accept NetApp's offer may not have been fair and open.
Attorneys at Bernstein Litowitz Berger & Grossmann filed suit in Delaware on June 12 on behalf of the Police and Fire Retirement System of the city of Detroit and "similarly situated shareholders of Data Domain," according to the firm's press release.
The suit contends that Data Domain's board breached its responsibility to shareholders by refusing to negotiate with EMC and for agreeing to sell Data Domain to NetApp without taking steps to maximize the price paid to Data Domain's shareholders.
"Data Domain's board of directors violated their fiduciary duties by approving the original and the restructured deals with NetApp, both of which give NetApp an improper bidding advantage in the form of a termination fee, a no-shop/no-talk provision and matching rights," said the Bernstein Litowitz Berger & Grossmann law firm in a statement. "The board granted each of these deal protections before any value-maximizing process took place, in a blatant effort to ensure that their favored merger partner is Data Domain's ultimate acquirer."
The firm has asked the court to issue an injunction preventing Data Domain and NetApp from consummating their merger.
Separately, law firm Levi & Korsinsky filed its own suit in California last week against Data Domain's board, with similar allegations.
"Under the terms of the proposal, Data Domain's shareholders would receive $30 to be paid in a combination of cash and NetApp stock," said Levi & Korsinsky in a statement. "In addition, NetApp offered positions on its board to certain Data Domain officers and there are rumors that the Data Domain CEO Slootman could be the next CEO of NetApp. This raises questions as to whether the sales process conducted by the board was fair and open."
A spokesperson at Data Domain contacted by CNET News said the company had no comment on the lawsuits.
The battle for Data Domain started on May 20 when NetApp offered $25 a share to acquire the company. On June 1, EMC jumped in with a $30-per-share bid. NetApp then countered with a similar offer. Since then, the market has speculated on why Data Domain is in such hot demand, causing these financial fireworks.