Iomega says it will consider increased EMC offer

Latest $205 million offer draws reluctant Iomega board to bargaining table

Iomega Corp. this week confirmed that it has agreed to begin talks to sell its business to EMC Corp. after the Hopkinton, Mass.-based storage vendor increased its offer for the storage and network security vendor from about $178 million to $205 million.

Iomega officials said the latest offer has prompted them to rethink the company's earlier agreement to acquire Cayman Islands-based Excelstor Great Wall Technology, and Shenzhen, China-based Excelstor Technology Ltd., in a stock deal.

In a statement released on Monday, San Diego-based Iomega said it would provide information requested by EMC as part of its offer. 

Iomega's board last week had unanimously rejected EMC's initial unsolicited offer. In yesterday's statement, the board called the latest offer a "superior proposal" than the agreement to acquire the two Chinese government-owned firms.  

Contacted by Computerworld today, Iomega officials declined further comment on EMC's latest offer. The statement said that the Iomega board will not release any further details about its negotiations with EMC until it is required to do so.

The statement did note that Iomega's board has not yet withdrawn or altered its recommendation that shareholders approve the acquisition of the Excelstor companies.

Dave Farmer, a spokesman for EMC, said that the company is "encouraged by Iomega's decision to move forward and is looking forward to the next steps."

Analysts say that an acquisition of Iomega would help EMC expand into the small and midsize business arena and the home user market -- a strategy long pushed  by EMC Chairman and CEO Joe Tucci.

"Iomega's efforts on the consumer side would mesh well with a few of EMC's recent initiatives, including the Mozy off-site backup service," said Matt Bryson, storage analyst at Avian Securities LLC. "However we feel the primary goal would be for EMC to increase its presence in the consumer-oriented external storage market."

Copyright © 2008 IDG Communications, Inc.

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