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Iomega Rejects EMC Offer

In a move that says as much about the market as the players involved, Iomega has turned down an offer from EMC to purchase Iomega for about $178.1 million.

Iomega's board met Sunday and decided that EMC's offer to acquire 54.8 million shares of Iomega common stock at $3.25 per share wasn't a "superior proposal." The deal breaker is apparently Iomega's plan, announced in December 2007, to merge with several affiliates of a China-based firm called ExcelStor, which manufactures some of Iomega's hard disk drives, including its REV series of removable drives, which ExcelStor has manufactured since 2004.

According to Iomega's official statement in December: "Iomega will issue approximately 84 million shares of common stock in Iomega in exchange for all outstanding ExcelStor common shares, representing in the aggregate 60% of the fully diluted capitalization of Iomega, to be measured as of the closing date. The Boards of Directors of both Iomega and ExcelStor have unanimously approved the share purchase agreement."

While the contents of EMC's offer were confidential, an Iomega spokesman indicated that the terms precluded Iomega's purchase of ExcelStor. But neither firm would add any details.

EMC's offer isn't surprising. Back in November 2007, EMC CEO Joe Tucci voiced his company's commitment to consumer and SMB storage, stemming in part from the the growth of Web 2.0 applications.

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