EMC buys Iomega for $213 million cash

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EMC late yesterday announced it had agreed to buy storage vendor Iomega for $213 million (£117 million) in cash in order to break into new growth markets.

The deal was finalised yesterday, although the information systems and storage vendor first expressed an interest in acquiring Iomega in mid-March for $3.25 (£1.65) per share. It later raised the offer to $3.75 per share, but announced on Tuesday that it had agreed to buy the company for $3.85 per share cash offer.

The storage device, appliance and managed security services company is best known for its popular consumer Zip and Rev storage drives. It also makes a number of items such as NAS arrays for the SME market. EMC said Iomega's well known brand and experience of the consumer market will help it to expand in that area.

It also said Iomega will be the foundation of a new consumer and small-business products division within EMC, which will also sell its own Retrospect backup and LifeLine storage software.

The deal is expected to close in the second quarter, subject to the usual conditions and regulatory approvals.

Jonathan Huberman, Iomega chief executive painted the deal as a 'win-win' situation for both firms, where EMC would have access to new markets and Iomega will be able to grow up into the enterprise using its new parent's global scope.

"Iomega will be able to fully leverage EMC's vast assets to grow our business globally," he said. "Through the Iomega brand; thousands of retail, direct marketing and distribution channel partners..., EMC will be able to extend its reach into the high-growth consumer and small business market segments."

Iomega will keep its headquarters in San Diego and currently employs about 250 people.

A condition of the deal was for Iomega to terminate plans that it had to acquire Chinese partner ExcelStor Great Wall Technology. Iomega recently announced plans to acquire ExcelStor, which has manufactured some of Iomega's external hard drive and Rev products since 2004, and affiliated companies to grow by its own acquisitions.

As a result, Iomega declared in a termination fee of $7.5 million (£3.8 million) to ExcelStor and affiliated companies in an US Securities and Exchange Commission (SEC) filing on the EMC deal.

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