announced that it has entered into a definitive agreement to acquire the ExcelStor Group. ExcelStor designs and manufactures a variety of digital storage technologies, including primarily hard disk drives, security storage products, and external storage products. ExcelStor has been quietly producing the award winning Rev Drive since 2004 for Iomega and has manufactured a variety of other products for them in the past, as well.
ExcelStor in the past has primarily been an OEM manufacturing partner for a variety of companies and has also sold its own branded products. ExcelStor been responsible for moving an impressive 20 million HDD based devices per year.
Iomega says that they are going to issue 84 million shares of common stock in exchange for all outstanding ExcelStor common shares, which is about 60% of the fully diluted capitalization of Iomega. The Board of the new combined company will be made up of both Iomega and Excelstor members.
Our take on this is that it could be a good thing for both companies. Iomega still has excellent brand recognition and good retail presence. The combination of Iomega and Excelstor should be able to deliver competitive products at attractive prices that should be lower due to the two companies combining. Still, Iomega is in a very competitive market space and they will have to deliver products that people want that have excellent styling and an attractive feature set that is not found in other storage products to gain market share; but it could be an excellent move by Iomega.
You can read the full press release by clicking here