EMC to Buy Zip Drive Maker Iomega for $213 Mln

SAN FRANCISCO, April 8 (Reuters) – Iomega Corp (IOM.N: Quote, Profile, Research) saidon 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 buya unit of China’s Great Wall Technology Co Ltd (0074.HK: Quote, Profile, Research) in astock swap.

The deal allows EMC, the world’s largest data-storageprovider, to expand in the consumer and small businessmarkets.

EMC will pay $3.85 per Iomega share, 6 percent more thanIomega’s Tuesday closing price of $3.64 and above an EMC offerin March of $3.75.

Shares of Iomega rose 4.4 percent to $3.80 in extendedtrade following the announcement, and EMC was unchanged at$14.84.

Shares of Iomega, known for its Zip drives, peaked in May1996 at about $110 per share and were popular with onlineinvestors in the post-Netscape era of hot initial stockofferings.

Iomega had rejected EMC’s initial offer and then begantalks when the larger company sweetened its bid to $3.75 ashare, or $205.5 million, in March.

Last December, Iomega had signed a deal to buy ExcelStor, aunit of Great Wall Technology, in a stock swap valued at thetime at $306 million. That deal would have made Great Wall itslargest shareholder.

Iomega said on Tuesday it paid $7.5 million to terminatethe ExcelStor deal in favor of EMC’s offer.

Iomega said on March 17 it was prepared to enter talks withEMC, based in Hopkinton, Massachusetts, after it sweetened itsoffer to $3.75 a share.

EMC said the acquisition, expected to be completed in thesecond quarter, would have no material impact on EMC finances.

Iomega, based in San Diego, was an investor favorite in the1990s but fell out of favor after the technology bubble burst.The maker of network-attached storage products, externalhard-disk drives and removable storage retains a strong brandrecognition among consumers.

(Reporting by Philipp Gollner and Duncan Martell; editing byJeffrey Benkoe and Braden Reddall)

 

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