NetApp: Rally Extends on Buyout Talk; Be Skeptical

NetApp (NTAP) shares have extended yesterday’s rally, which apparently is due to ongoing speculation that the company could be an acquisition target.

Cowen’s Louis Miscioscia assessed the rumors in a research note this morning. He says an acquisition of the company is possible, but unlikely. “NetApp has a commanding presence in the NAS [network-attached storage] space, which would be attractive to any enterprise hardware company,” he writes. “However, given timing and finances, we believe there is only one possibility as [a] candidate, IBM.”

And even IBM would be a surprise, he says. Miscioscia notes that while IBM has done many deals over the past 10 years, none would be as large as this one–he figures it would take about $10 billion to buy NetApp, given a modest premium to the current $8.6 billion market cap. He says the odds IBM would attempt a deal that size are “low,” given its focus on buying smaller companies.

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