Tuesday, April 8, 2008

EMC goes consumer with $213M Iomega purchase bid

Hopkinton storage technology developer EMC Corp. is making a strong move into the consumer and small-business hardware space, paying approximately $213 million for California-based consumer data protection equipment maker Iomega Corp.

The deal, which is expected to close in the second quarter of 2008 and would have no material impact on EMC's financial results for its fiscal 2008, has EMC paying $3.85 per outstanding share for Iomega. The price represents a 11 cents per share premium over the stock's closing price yesterday, and a 60 cent increase over a previous, $178 million offer made in March, which was rejected.

With the acquisition, EMC gets a well-known brand in the small to midsize business (SMB) storage space. According to a statement from EMC chairman and CEO Joe Tucci, the acquisition is part of an overall strategy by the company to expand its "information storage and management capabilities deeper into the high-growth consumer and small-business markets."

The two companies have had a relationship since 2004, when Iomega began packaging and selling EMC Retrospect backup software with all of its external disk drives after EMC bought Retrospect creator Dantz Development Corp.

As a result of the deal, Iomega yesterday canceled its previously announced deal to acquire Chinese hard-disk-drive manufacturer ExcelStor, absorbing a $7.5 million cancellation fee in the process.

Upon completion of the acquisition, Iomega will serve as the core of a new EMC division called the Consumer/Small Business Products Division. The new division will be led by former Iomega CEO Jonathan Huberman and will also include EMC Retrospect and EMC LifeLine software product lines.

The acquisition is EMC's fifth since December. On April 1, EMC paid out $84 million for U.K.-based Conchango plc., a technology consulting firm. In March, the company announced the purchase of Australian provider of service management software Infra Corp. Pty Ltd. for an undisclosed amount, while in February it paid an undisclosed amount for Pi Corp., a privately held maker of personal information management software, based in Seattle. In December 2007, EMC agreed to buy for $85 million Document Sciences Corp., a California company that develops document output management software for personalized communications.