EMC Wins In Pursuit of Iomega (EMC, IOM)

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EMC Corp. (NYSE: EM) has won in its attempt to acquire Iomega Corporation (NYSE: IOM).   EMC will acquire San Diego-based Iomega for a purchase price of $3.85 per share in a deal valued at some $213 million.

This merger will marry EMC’s corporate and enterprise data storage and with Iomega’s business and personal data storage.  The addition of Iomega’s products, brand name, distribution channel and industry expertise will also bring EMC into the rapidly-growing consumer and small business markets.

Iomega subsequently announced the termination of a share purchase agreement With ExcelStor entities, and Iomega has paid a $7.5 million break-up fee to the group as a result.

This is one of those mergers that should have been expected by now since Iomega had already gotten a sweetened buyout offer from EMC and ultimately acknowledged that it was a superior transaction to what it had on the table with ExcelStor.  EMC intends to commence the tender offer in the next two weeks, and it expects to complete the tender offer expected in the second quarter of 2008

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Iomega shares closed down 1% at $3.64 today in regular trading and shares are up close to 5% at $3.81 in after-hours.  That leaves barely 1% arbitrage for a merger that has already been approved and is almost certainly a done deal.

Jon C. Ogg
April 8, 2008

Jon Ogg produces the Special Situation Investing Newsletter.  He can be reached at jonogg@247wallst.com and he does not own securities in the companies he covers.