Iomega buys China's ExcelStor in share swap

US data storage firm Iomega said it would buy ExcelStor, part of the state-owned IT conglomerate China Electronics Corporation (CEC), in a US$316 million share swap, the Wall Street Journal reported. Iomega will issue 84 million shares in exchange for all of ExcelStor’s common shares. ExcelStor is owned by Hong Kong-based Great Wall Technology, which is controlled by a unit of CEC. The deal will give Great Wall 43% of Iomega’s common stock, and CEC would have a 27% stake in Iomega and control all of Great Wall’s holdings. ExcelStor and its owners will nominate five of nine Iomega directors for at least two years. According to Iomega’s chief executive, Jonathan Huberman, the deal would allow Iomega to improve its weak presence in China. Huberman also plans to sell products made by CEC-affiliated companies. ExcelStor, which had US$707 million in revenues in 2006, is also more profitable than Iomega and should improve its earnings, he said. The deal will be reviewed by US and Chinese officials, but Huberman expects the deal to be approved, as Iomega largely packages technology developed by others.