EMC to Buy Zip Drive Maker Iomega for $213 MlnBy Reuters - | Posted 2008-04-11 Email Print
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EMC, the world's largest data-storage
provider, will expand in the consumer and small business
SAN FRANCISCO, April 8 (Reuters) - Iomega Corp (IOM.N: Quote, Profile, Research) said on Tuesday it had accepted an increased cash takeover offer of $213 million from EMC Corp (EMC.N: Quote, Profile, Research) and would drop a plan to buy a unit of China's Great Wall Technology Co Ltd (0074.HK: Quote, Profile, Research) in a stock swap.
The deal allows EMC, the world's largest data-storage provider, to expand in the consumer and small business markets.
EMC will pay $3.85 per Iomega share, 6 percent more than Iomega's Tuesday closing price of $3.64 and above an EMC offer in March of $3.75.
Shares of Iomega rose 4.4 percent to $3.80 in extended trade following the announcement, and EMC was unchanged at $14.84.
Shares of Iomega, known for its Zip drives, peaked in May 1996 at about $110 per share and were popular with online investors in the post-Netscape era of hot initial stock offerings.
Iomega had rejected EMC's initial offer and then began talks when the larger company sweetened its bid to $3.75 a share, or $205.5 million, in March.
Last December, Iomega had signed a deal to buy ExcelStor, a unit of Great Wall Technology, in a stock swap valued at the time at $306 million. That deal would have made Great Wall its largest shareholder.
Iomega said on Tuesday it paid $7.5 million to terminate the ExcelStor deal in favor of EMC's offer.
Iomega said on March 17 it was prepared to enter talks with EMC, based in Hopkinton, Massachusetts, after it sweetened its offer to $3.75 a share.
EMC said the acquisition, expected to be completed in the second quarter, would have no material impact on EMC finances.
Iomega, based in San Diego, was an investor favorite in the 1990s but fell out of favor after the technology bubble burst. The maker of network-attached storage products, external hard-disk drives and removable storage retains a strong brand recognition among consumers.
(Reporting by Philipp Gollner and Duncan Martell; editing by Jeffrey Benkoe and Braden Reddall)