It may be second time lucky for EMC as it attempts to buy storage manufacturer Iomega. This week, Iomega – which has previously batted off EMC's advances – said a new, improved offer from EMC is superior to other potential deals.
In an unsolicited, non-binding "indication of interest", EMC is now offering as much as US$3.75 (£1.85) per share, according to Iomega, up from about $3.25 (£1.60) per share in an offer earlier this month. With about 54.8 million Iomega shares outstanding, the new offer values the company at approximately $205.5 (£102) million.
Iomega agreed in December to acquire a Chinese partner, ExcelStor Great Wall Technology, and an affiliated company, in a deal that would create a dramatically bigger vendor with a broader product line.
When EMC made its first offer, for about $178 (£88) million, Iomega rejected it as inferior to the ExcelStor deal.
Iomega said it remains committed to the ExcelStor transaction, which is pending regulatory approval, but its board has authorised the company to talk with EMC and give it information in pursuit of the proposed buyout.
Iomega made its name with its popular Zip drives and removable disks for consumer data storage and today sells external hard drives, networked storage, online storage and other products in addition to Zip and the newer Rev removable disks. Hot stock in the 1990s, it has faced a growing competitition as the market has grown. Even big players such as EMC have tried to move into Iomega's territory.
When Iomega announced the ExcelStor deal in December, president and CEO Thomas Kampfer said his company just wasn't big enough to develop and market products beyond external storage. That combination would increase its workforce by ten times, to about 3,000, and boost its revenue from $300 million (£148 million) to about $1.1 billion (£545 million) per year.
Being acquired by EMC, which reported more than $13 billion (£6.45 billion) in revenue last year, would also boost Iomega's scale and resources.
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