EMC to buy Iomega for $213 million
EMC has agreed to buy storage
vendor Iomega
for US$213 million in cash, expanding EMC's reach into the fast-growing consumer
and small business markets, the companies announced Tuesday.
EMC said Iomega's well-known brand and knowledge of the consumer market will
help it to expand in that area. Iomega will form the core of a new consumer
and small-business products division at EMC, which will also sell EMC's Retrospect
backup software and LifeLine storage software.
Iomega is best known for its popular Zip and Rev storage drives. It also offers
storage appliances and managed security services.
EMC expressed an interest in acquiring Iomega in mid-March for $3.25 per share.
It later sweetened the offer to $3.75 per share, and on Tuesday it said it had
agreed to buy the company for $3.85 per share.
EMC said it expects the deal to close in the second quarter, subject to the
usual closing conditions and regulatory approvals.
Besides helping EMC to penetrate the consumer market, the deal will also help
Iomega's products to reach deeper into the enterprise, where they have a minimal
presence today, Jonathan Huberman, Iomega's CEO, said in an interview.
"Being part of EMC will make us grow significantly faster," Huberman
said, adding that EMC will maintain the Iomega brand name.
Iomega will keep its headquarters in San Diego, Huberman said. He said it was
too early to discuss any layoffs that might result from the deal, although he
said the number of people involved with Iomega products at the combined company
could expand over time. Iomega employs about 250 people.
In agreeing to a deal with EMC, Iomega terminated plans that it had to acquire
Chinese partner ExcelStor Great Wall Technology, EMC said. Iomega had announced
plans to acquire ExcelStor and affiliated companies to make itself a larger
company.
ExcelStor was founded by executives from Seagate and Counter Peripherals in
2001. It has manufactured some of Iomega's external hard drive and Rev products
since 2004, and sells its own branded storage products worldwide.
Iomega could do only one deal, and EMC was in the best interests of shareholders,
Huberman said.
Iomega paid a termination fee of $7.5 million to ExcelStor and the affiliated
companies, Iomega said in an SEC filing.
IDG News Service
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