EMC Corp. of Hopkinton, the world's leading provider of massive data storage systems for corporations and governments, has been rebuffed in its latest bid to expand into the small business and consumer markets.
Iomega Corp. said yesterday that it had rejected an EMC bid to buy Iomega for $178 million. Iomega is best known for the Zip drive, a large-format floppy disk device popular during the 1990s. The San Diego company also makes a variety of external hard drives for home and small business applications.
In December, Iomega agreed to a stock swap with ExcelStor Great Wall Technology Ltd. of the Cayman Islands and Shenzhen ExcelStor Technology of China. The deal would give ExcelStor shareholders a 60 percent stake in Iomega.
Yesterday, Iomega issued a statement saying that EMC's offer was reject ed by the company's board because it "would not reasonably constitute a superior proposal" to the ExcelStor deal.
"We're disappointed at the decision of Iomega's board," said EMC spokesman Dave Farmer. He added, "We look forward to discussions with Iomega," suggesting that EMC plans to continue pursuing a deal.
Farmer said EMC's bid for Iomega was "consistent with our strategy to serve the consumer and small business markets." EMC has made a number of consumer-oriented moves recently. Last year, EMC bought Berkeley Data Systems, a Utah company that created the Internet-based data backup service Mozy for businesses and consumers. In February, EMC acquired Pi Corp., a Seattle start-up founded by former Microsoft Corp. senior executive Paul Maritz that sells an online personal data management system. In January, EMC unveiled LifeLine, a software package for use with large external hard drives and tailored for consumer and small business use. Both Iomega and Intel Corp. have signed on to use LifeLine software in their external storage devices.
"Clearly EMC has placed a whole bunch of bets that allow them to move into the consumer and small business segment," said Tony Prigmore, senior analyst at the Enterprise Strategy Group in Milford. "They must see Iomega as an enhancement to the amount of momentum they have now."
Not only does Iomega already make a number of external storage devices; it's also a company with an established presence in electronics retail stores, something that EMC presently lacks. "EMC must be saying, this is a way for us to move into that channel faster," said Prigmore. "And this is a way for them to pick up a well-known brand that they can move their own products through."
Prigmore predicted that EMC would not easily give up on acquiring Iomega. "If this is something that EMC sees as strategic," he said, "they will continue to try."
Iomega shares jumped 20 percent to close at $3.20, while EMC closed down 33 cents at $14.70.
EMC also announced yesterday that it has acquired privately held Infra Corporation Pty Ltd., an Australian provider of software used by companies to manage their computer help desks. Financial details of the transaction were not revealed, and EMC said the transaction would not have a material impact on revenues or earnings.
Hiawatha Bray can be reached at bray@globe.com.
