Deal could increase Iomegas value

By Chris Preimesberger  |  Posted 2008-03-18 Print this article Print

Great Wall is an indirect subsidiary of China Electronics, a $16 billion conglomerate which, in turn, is wholly owned by the Chinese government. CEC, which owns 62 percent of Great Wall, will end up with about 25 percent of Iomega through the stock trade transaction, Kampfer said. Iomega itself would end up with only 32 percent ownership.

"At this point, we are getting ready to send proxy papers to the FTC on the Chinese deal," Iomega spokesperson Chris Romoser told eWEEK. "So that deal is continuing as originally planned. We expect it to be completed around mid-year. Our board has simply empowered a committee to look into the EMC offer."

A look at the SEC filings shows that Iomega, if it were to complete the Chinese deal, could become worth far more than the $3.75 per share EMC is offering at this time. But the stock deal is based upon assumptions of future worth, as is any such transaction.

In addition, there is a $7.5 million "breakoff" penalty Iomega will have to pay to ExcelStor if the Chinese deal is not completed.

Thus, the Iomega board has some key decisions to make.

Meanwhile, Iomega has a number of products that EMC would like to use in its initiative to move deeper into mid-market sales. For example, Iomega's REV line could support EMC's drive to offer more consumer solutions and hybrid products for home businesses and remote offices. "These two companies have been partners for a long time," Bob Laliberte, storage analyst with Enterprise Strategy Group, told eWEEK. "It would seem to be a natural progression for EMC to acquire Iomega in order to continue to develop more consumer-oriented products. EMC could then offer hybrid-type products for both home businesses and remote offices, using Iomega's REV line." Iomega has sold more than 400 million digital storage drives and disks since its founding in 1980. The company is well known for such consumer products as the Zip and Jaz storage drives.

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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