Did EMC blunder with Iomega bid?

Could EMC make a hostile takeover bid?

Why did Iomega rebuff EMC’s acquisition offer in public so forcefully? Is it saying ‘no’ in no uncertain terms and forcing EMC to mount a hostile takeover bid if it wants to proceed?

EMC could have phoned up Iomega’s CEO, Jonathan Huberman (pictured)¬†and suggested they dance the acquisition tango together and Iomega could have politely declined with that being that; end of story, nothing said publicly at all.

But no. That wasn’t what happened. Somewhere along the way Iomega’s feathers became ruffled and it let out a squawk of annoyance.

Read the March 10th Iomega statement: “Iomega Corporation announced today the receipt of an unsolicited non-binding indication of interest from EMC Corporation … Iomega’s board of directors … unanimously determined that the proposal from EMC would not reasonably constitute a superior proposal within the meaning of the share purchase agreement between Iomega … (and ExcelStor) …The Board reached its conclusion based upon valuation and the Board’s view that the proposed due diligence contingencies were overly broad.”

Does this suggest that Iomega though EMC was being cavalier, possibly arrogant? We can readily understand a difference in valuation but why make it public? We can equally well understand differences of opinion about due diligence concerns but, again, why make it public?

Perhaps it happened like this; EMC suggested an acquisition, Iomega said: “We’ll examine it”, did so and said: “No”. EMC pressed again, possibly too hard, and Iomega, now upset, said ‘NO’ loudly and in public.

It was like a slap in the face from a lady who had received a pass that was expressed in a way she didn’t like. Somebody, somewhere seems to have fouled up. The relationship between EMC and Iomega must now be cool and a revised, meaning improved, bid from EMC would seem to be not wanted either.

In which case EMC might have to continue its acquisition initiative by mounting a hostile takeover.

Does it want to do this? So far it has taken over twenty or more companies in a ‘smoth as silk’ manner with executives and shareholders of acquired companies rolling over and opening their trouser pockets to receive cash and or shares.

But not Iomega. How badly does EMC want Iomega? It might have to increase its offer truly substantially to have Iomega’s executive team and shareholders be grateful and express gratitude for entry to Hopkinton heaven. Or it may go hostile and appeal to Iomega’s shareholders over the heads of Huberman and his team for whom, at present, Hopkinton appears closer to hell than heaven.

Equally it could decide to walk away, which would not say a lot for its determination. It looks as if EMC is wriggling in a cleft stick, possibly of its own making.

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