EMC bumps up bid for Iomega
Storage company resumes talks on $205m offer
Iomega Corp. of San Diego said yesterday that it's willing to talk about a buyout offer from EMC Corp. of Hopkinton, now that EMC has sweetened a previously rejected bid by $27 million.
Iomega last week turned down an EMC offer of $3.25 cash per share, or $178 million. Iomega said the offer wasn't a substantial improvement over Iomega's plan for a stock swap deal with ExcelStor Great Wall Technology Ltd. of the Cayman Islands and Shenzhen ExcelStor Technology of China. That deal would give ExcelStor shareholders a 60 percent stake in Iomega.
But yesterday, Iomega announced that EMC had bumped up its offer to $3.75 a share, or $205.5 million. "The revised acquisition proposal from EMC would reasonably constitute a superior proposal" to the ExcelStor deal, according to a statement issued by Iomega. As a result, the Iomega board has authorized further talks with EMC.
"We're certainly encouraged by Iomega's decision to move ahead with EMC discussions," said EMC spokesman Dave Farmer, "and we're looking forward to next steps."
While EMC is the world's leading maker of high-end storage gear for large companies, Iomega has specialized in small storage devices for consumers and small-to-medium-sized businesses. Best known for its large-capacity Zip drives and disks, which were popular in the mid-1990s, Iomega also makes a variety of external hard drives and storage servers.
Tony Prigmore, senior analyst at the Enterprise Strategy Group in Milford, said EMC's bid for Iomega is part of a long-standing plan to make EMC a significant supplier of storage gear to small businesses and consumers. He said that amid increasing evidence of a slowing economy, it makes sense for EMC to diversify its product offerings. "Anything you can do to set yourself in adjacent markets is going to be very important to near-term and long-term future growth," Prigmore said.
Shares of Iomega rose 38 cents to $3.64, while EMC fell 32 cents to $14.47, both on the New York Stock Exchange.
Hiawatha Bray can be reached at bray@globe.com.
