EMC, Iomega to Wed

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A little wooing goes a long way. After weeks of being rebuffed, EMC announced yesterday that it will acquire Iomega for $213 million, with the tender offer expected to complete by the end of June (see EMC, Iomega Begin Merger Talks).

To accept EMC’s $213 million, $3.85 per-share offer, Iomega terminated a separate purchase agreement with ExcelStor, costing the company a $7.5 million breakup fee.

Acquiring Iomega gives EMC a huge customer footprint and a deep channel into the consumer, small office and small business storage markets, better positioning it against other strong SMB market competitors such as Dell (which is both a partner and competitor) and HP.

“EMC’s been working to get into the SMB market for at least four years,” said Greg Schultz, senior analyst and founder of StorageIO Group. “Having Iomega would give it instant brand recognition,” especially in the exploding low-end, network-attached storage (NAS) market.

“We’re super excited, as we’ve wanted to get into this area,” said Joel Schwartz, senior vice president and general manager for EMC’s storage platform unit. “We’re ready to make good use of Iomega’s DNA.”

The announcement, coming on the second day of Storage Networking World in Orlando, Fla., arrived with little fanfare, despite coming earlier than analysts and pundits had expected. A number of industry observers had speculated that no deal would take place until the EMC World user conference in May.

For Iomega, the chance to partner with a giant in enterprise storage could potentially open a number of new doors.

“We are just very excited about the opportunity, as EMC provides the opportunity to be on even footing with the multi-billion dollar players we’re competing with,” said Iomega CEO Jonathan Huberman, who added that Iomega had $336 million in revenues last year.

He said EMC’s enterprise reach could lead to Iomega producing enterprise-level storage technologies, such as de-duplication, for the small to mid-sized business environment.

“We have had no exposure to the enterprise until today, and the opportunity to move into that level is exciting,” he said.

Following the acquisition’s completion, Iomega will become the core of EMC’s new consumer/small-business products division. Huberman will continue to lead the unit and will report to Schwartz.

The division will also include EMC’s Retrospect backup software and LifeLine network-attached software.

According to EMC, the two companies — who have previously worked together as longstanding partners — “will continue to build upon their existing foundation of technology integrations.” Iomega has been reselling EMC Retrospect backup software since 2004.

Iomega, perhaps best known for its Zip, Jaz and Rev removable storage products and its line of external hard drives, had been making overtures to purchase the ExcelStor Group, a digital storage player, since early December. That relationship had culminated in a definitive share purchase agreement for ExcelStor.

In a statement released yesterday, Iomega reported that it terminated that agreement — just minutes before EMC released the news of its own successful offer for Iomega.

Charles King, principal analyst at Pund-IT, said Iomega’s business could be a good fit with EMC’s Retrospect and Lifeline products.

“The company’s extensive worldwide channel ecosystem, which includes retailers, direct marketers and resellers, should increase EMC’s visibility among a wide range of storage customers,” he said.

EMC, which finally succeeded on its third bid for Iomega, had previously made it clear that it had no need for ExcelStor in the deal.

It is EMC’s second acquisition in a week, following its purchase of WysDM.

Article courtesy of InternetNews.com

Judy Mottl
Judy Mottl
Judy Mottl is an experienced technology journalist who has served as a senior editor, reporter, writer, and blogger for InformationWeek, Investors Business Daily, CNET, and Information Security Magazine, as well as other media outlets.

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