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EMC revs up interest in Iomega

Dave Raffo, News Director
EMC Corp. increased its offer for Iomega Corp. as expected, and this time Iomega might accept it.

Iomega today said EMC raised its offer to $3.75 per share, up from $3.25 per share last week. That makes the new offer worth $205.5 million compared to $178.1 million for the original offer.

Iomega's directors turned down EMC's first bid last week, but said today's revised offer "would reasonably constitute a superior proposal" than its pending merger with Chinese company ExcelStor Technology., according to Iomega's directors. The statement added that Iomega's board authorized the company to discuss a deal with EMC, although it has not withdrawn or changed its recommendation about the ExcelStor agreement that it signed last December.

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"Iomega's board of directors, together with its financial and legal advisors, will continue to evaluate all aspects of the acquisition proposal from EMC," Iomega said. "While Iomega's board of directors has determined that the EMC acquisition proposal would reasonably constitute a superior proposal, it has not determined that a transaction with EMC is superior to the business combination contemplated under the ExcelStor purchase agreement, as there are no agreed upon terms for a transaction with EMC."

Iomega also said it will enter a confidentiality agreement with EMC and will not comment again on the proposal or discussions "until further action on the part of Iomega is required." EMC's revised bid is nonbinding.

EMC's courtship of Iomega comes as the storage network giant tries to expand into the consumer space. Iomega sells EMC's low-end Retrospect data backup software and distributes EMC's Lifeline home NAS whitebox. Iomega also offers its own NAS products, external hard drives and the REV removable backup drive.

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