The second time may prove to be the charm in EMC's attempt to acquire Iomega, as the consumer and small-business storage maker said Monday that EMC's latest offer is superior to other potential deals.
In an unsolicited, nonbinding "indication of interest," EMC is now offering as much as US$3.75 per share, according to an Iomega statement, up from about $3.25 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 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 that could offer a broader product line. When EMC made its first offer, for about $178.1 million, Iomega rejected it as not being superior to the ExcelStor deal. Iomega said it remains committed to the ExcelStor transaction, which is pending regulatory approval, but its board has authorized 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. The San Diego company was a pioneer in consumer storage and a hot stock in the 1990s, but as the market has grown and technology has changed, it has faced a growing number of competitors. 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 to about $1.1 billion per year. Being acquired by EMC, which reported more than $13 billion in revenue last year, would also boost Iomega's scale and resources.
"We're encouraged by Iomega's decision to move ahead with EMC discussions, and look forward to next steps," EMC said in a statement Monday.
In midday trading on the New York Stock Exchange, Iomega shares (IOM) were up $0.27 at $3.53 and EMC's stock (EMC) was down $0.44 at $14.35.