NetApp has terminated its merger agreement with Data Domain, clearing the path for EMC to snap up the deduplication company.

The virtualisation vendor announced today that it will not revise its proposal to acquire Data Domain in the wake of EMC’s higher unsolicited offer. As a result NetApp has received a $57m (£35m) break-up fee from Data Domain.

Earlier this week EMC upped its bid to $2.1bn, moving ahead of NetApp’s $1.9bn offer made last month.

EMC also stressed it could close the transaction within two weeks, almost a month faster than NetApp.

Dan Warmenhoven, NetApp’s chief executive, said: “While NetApp’s acquisition of Data Domain would have produced benefits for customers and employees and complemented NetApp’s existing growth trajectory, we remain highly confident in our already compelling strategic plan, market opportunities and competitive strengths.

“NetApp applies a disciplined approach to acquisitions, one focused intently on creating long-term value for our stockholders. We therefore cannot justify engaging in an increasingly expensive and dilutive bidding war that would diminish the deal’s strategic and financial benefits.”

NetApp first showed interest in Data Domain in May with an opening offer of $1.5bn to buy all of the outstanding shares of Data Domain common stock for $25 per share in cash and stock.

Warmenhoven concluded: “NetApp has established leadership positions in virtualised infrastructure, storage efficiency and unified storage, even in these difficult economic times, by helping customers meet their business objectives with less physical storage while reducing costs.

“That commitment will not change. We look forward to continuing to build on our foundation of innovation and customer service, and to continuing to execute our successful growth strategy.”