Merger to expand Iomega

Iomega Corp., which had more than 3,000 employees during the crest of the craze for Zip data storage drives, will see its employee count nearly match that level as it acquires a China-based designer, developer and manufacturer of digital storage technologies.

Iomega, which has operations in Roy and currently employs about 300 people worldwide, announced Wednesday it has agreed to acquire ExcelStor Great Wall Technology Ltd., a Cayman Islands company, and China's Shenzhen ExcelStor Technology Ltd., collectively known as ExcelStor.

Iomega will issue about 84 million shares of common stock in exchange for all outstanding ExcelStor common shares. If the transaction were based on Wednesday's closing price of $3.77 for Iomega shares, the deal would be for about $316.7 million.

The transaction is expected to close by mid-2008. After that, ExcelStor will operate as a wholly owned Iomega subsidiary. Iomega headquarters will remain in San Diego.

The ExcelStor companies and subsidiaries will have about $800 million in revenue and be profitable in 2007, said Thomas Kampfer, Iomega's president and chief operating officer. ExcelStor also has 2,700 employees who will be added to Iomega's 300.

The transaction piggybacks on several changes at Iomega that "got things moving again" for the company, Kampfer said. Revenues in 2006 totaled about $220 million, and the company is on track to top $300 million in 2007. "The company has been profitable for five straight quarters after having lost money for many years," he said.

In addition to the San Diego headquarters and nearly 60 employees in Europe, Iomega has its research and development, operations group and part of its finance and sales organization in Roy. That Weber County community has about 125 Iomega employees, and, without making a specific projection, Kampfer hinted that figure could rise as the company grows.

"We've done very well with that site in the past couple of years as we've grown," he said. "We're adding headcount, and with this opportunity, we see a lot more growth for Iomega, the opportunity to bring on new and exciting products, and the Roy office will be a big part of that.

"Things are really moving ahead for us. We've got a great brand in the Iomega name, great channels of distribution and sales and marketing and really successful product lines we've launched in the last year. This transaction is about taking the next step and becoming much larger and growing very rapidly."