EMC offers Iomega a premium price for shares of stock

The Iomega name is synonymous with products such as the proprietary Zip and Jaz drives, -- those removable magnetic storage devices that took off but were then overtaken by other storage solutions such as rewritable DVDs and eventually external hard drives and flash media. The company recently launched another proprietary storage solution named REV which implemented magnetic hard drive technology in a removable cartridge format.

Iomega, like many other companies in the technology sector, peaked in the late 90s but never regained the momentum. Its stock soared from just over $1 per share in late 1994 to over $110 per share in mid-1996 with the launch and short-term success of its Zip drive products. However, after that high-point, Iomega's stock price has sunk to a current price of roughly $3.60 per share.

EMC Corporation, a Massachusetts-based company focused on producing enterprise storage systems, thinks there's still value in magnetic storage. EMC's unsolicited offer of $3.25 per share for a total of $178 million was rejected by Iomega's board of directors last week, a decision that bewildered most financial analysts.

EMC revised its initial offer of $3.25 per share to $3.75 per share, which would add up to $205.5 million on the table for Iomega's consideration. This is a $0.15 premium over the current per-share price.

If Iomega's board of directors approves this revised offer, Iomega's current pending deal with China-based Shenzhen ExcelStor Technology Ltd. and ExcelStor Great Wall Technology Ltd. will be put to rest. This pending acquisition of ExcelStor would give control of Iomega to the Chinese storage solution companies.

For now, EMC's offer is just that and Iomega has stated that the efforts regarding ExcelStor are still on the schedule.

"What would I do? I'd shut it down and give the money back to the shareholders." -- Michael Dell, after being asked what to do with Apple Computer in 1997
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