BOSTON (AP) -- Iomega Corp., a data storage company best known for the Zip drive, said Monday it considers a revised $205.5 million takeover offer from EMC Corp. to be superior to a proposed all-stock transaction with a stockholder.
San Diego-based Iomega said EMC's revision to its earlier, unsolicited offer would increase the offering price for Iomega's 54.8 million outstanding shares to as high as $3.75 per share. An offer from EMC that Iomega disclosed a week ago proposed a price of $3.25 per share, or about $178.1 million.
While EMC's offer is nonbinding, Iomega said its board "has determined that the revised acquisition proposal from EMC would reasonably constitute a superior proposal" to an agreement reached in December with other parties.
Under that deal, Iomega agreed to acquire China's ExcelStor Group from a shareholder of the California company in an all-stock deal that would more than double the number of its outstanding shares.
Had that deal closed, Great Wall Technology Co. Ltd. - an Iomega shareholder and parent firm of ExcelStor - would have held a majority stake in Iomega, and ExcelStor would operate as a wholly owned subsidiary of Iomega. Financial terms were not disclosed.
Iomega had considered EMC's initial, lower offer inferior to the other transaction.
With the higher offer, Iomega said will enter into discussions with EMC that could lead to a definitive acquisition proposal.
Dave Farmer, a spokesman for Hopkinton, Mass.-based EMC, said in statement, "We're encouraged by Iomega's decision to move ahead with EMC discussions, and look forward to next steps."
EMC's storage services are largely geared toward corporate clients, and acquiring Iomega would expand EMC's business with small businesses and consumers.
Iomega, a 28-year-old company with about 300 employees, is best known for the more than 50 million Zip storage drives and 300 million Zip disks it has sold since 1995.
But Zip products now make up a small share of Iomega's current storage business, which is focused on such successor technologies as the Rev backup drive, as well as storage accessed via computer networks.
Shares of Iomega rose 38 cents, or 11.7 percent, to close at $3.64 Monday while EMC's stock fell 32 cents, or 2.2 percent, to close at $14.47.