Iomega Corp., the maker of data- storage devices, rejected an unsolicited $178.1 million takeover offer by EMC Corp., saying it wasn't better than a pending purchase agreement with Great Wall Technology Co.
Iomega's directors, who met Sunday, made the decision based on valuation and because "the proposed due-diligence contingencies were overly broad," the San Diego-based company said Monday in a statement. The $3.25-a-share bid was 22 percent higher than Iomega's March 7 closing price. Iomega has about 225 employees, including about 125 in Utah.
Great Wall, a computer maker based in Shenzhen, China, and ExcelStor Group Ltd. agreed to sell ExcelStor GWT, which markets Great Wall's products outside China, to Iomega in exchange for a 60 percent stake in Iomega and $50,000 in cash, according to a Dec. 12 statement. The deal would give Great Wall access to Iomega's distribution channels.
"We extended a compelling offer, and we're disappointed with the decision of Iomega's board," EMC spokesman Dave Farmer said in an interview. "We're looking forward to further discussions with Iomega."
Iomega rose 54 cents, or 20 percent, to close at $3.20 Monday in New York Stock Exchange composite trading, the biggest gain since Jan. 3. The shares had declined 23 percent this year before Monday. EMC fell 33 cents to $14.70.
EMC, based in Hopkinton, Mass., is the world's largest maker of storage computers. Since 2003 it has spent almost $8 billion acquiring companies, most of them focused on software. Chief Executive Officer Joe Tucci has used the acquisitions to expand sales beyond hardware aimed at large companies.
Iomega, founded in 1980, sells consumer and small-business oriented products, such as disk drives. Its distribution extends to more than 11,500 stores in the Americas, Europe and Asia, according to the company's Web site.
"Iomega is not really an innovator, so EMC would be buying their brand and distribution channels," James Porter, an analyst with Disk/Trend Reports in Mountain View, Calif., saidin an interview.
Iomega could fit with a new EMC unit that delivers software and services to consumers over the Web, Jayson Noland, an analyst with Robert W. Baird & Co. in Milwaukee, said in an interview. Iomega's quarterly Web sales total $2 million to $2.5 million, according to its Web site.