UPDATE 1-Iomega to enter talks with EMC after sweetened offer

(Recasts; adds details, background, share movement)

March 17 (Reuters) - Iomega Corp IOM.N said it was prepared to enter into talks with EMC Corp EMC.N after the suitor sweetened its offer to buy the computer storage provider by about 15 percent, or $27.4 million.

EMC’s new offer values Iomega, known for its Zip drives, at $3.75 a share, or $205.5 million. Shares of Iomega, whose products include network-attached storage products, external hard drives and removable storage technology, rose 9 percent to $3.55 in morning trade on the New York Stock Exchange.

Iomega’s board will be evaluating how EMC’s offer compares with a merger deal it had in the making with China’s ExcelStor.

Last December, Iomega signed a merger deal with a unit of China's Great Wall Technology Co Ltd 0074.HK, ExcelStor Group, agreeing to issue some 84 million shares in exchange for all outstanding ExcelStor common stock.

When EMC first offered $3.25 a share, Iomega rejected the offer, saying the bid was not superior to the ExcelStor deal. (Reporting by John Tilak in Bangalore; Editing Bernard Orr)