EMC grabs Zip manufacturer Iomega for $213 million

Falling star Iomega has been purchased by Storage giant EMC for $213 million, a month after EMC initially started acquisition talks with Iomega.

The first proposal valued Iomega at only $178 million which the storage firm dismissed, saying that it was not "superior" to the merger talks it was holding at the time with Chinese storage specialist Excelstor.

Iomega agreed to be bought by EMC at $3.85 per share, a far cry from the good days of March 1996 when the stock was selling at more than $110.

Commenting on the acquisition, Iomega CEO Jonathan Huberman told CNet that the agreement will allow Iomega to grow more.

He added : "Our markets are adjacent, but not overlapping, We have strong brand and channel presence in business and consumer (markets), but what we do lack is scale."

Iomega brand will allow EMC to get into the consumer and small business markets relatively quickly since Iomega has been a fairly recognised name ever since it introduce the Iomega ZIP in 1994.

Already there are speculations as whether (a) EMC could seek a potential partnership with Excelstor, which would provide it with a foothold in China - even if Iomega has already terminated the deal with it (b) how Iomega and Mozy may be integrated.

Iomega has been famous for its range of external storage devices like the Rev, the Jazz and the Zip whose success came to an abrupt end as falling CD prices and USB drives became popular.