EMC to buy Iomega for US$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 US$3.25 per share. It later sweetened the offer to US$3.75 per share, and on Tuesday it said it had agreed to buy the company for US$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 US$7.5 million to ExcelStor and the affiliated companies, Iomega said in an SEC filing.

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Jim Love, Chief Content Officer, IT World Canada

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