External disk storage maker Iomega on Dec. 12 announced that it will acquire ExcelStor Great Wall Technology, an $800 million hard drive manufacturer based in Shenzhen, China, through exchange of stock. No cash will change hands, Iomega President and Chief Operating Officer Tom Kampfer told eWEEK. Iomega will issue approximately 84 million shares of common stock, representing roughly 60 percent of the market value of the company, in exchange for 100 percent of ExcelStor, Kampfer said. When the deal is completed in mid-2008, he said, $2.6 billion Great Wall Technology—which now owns 60 percent of ExcelStor—will own about 43 percent of Iomega"s stock, making GWT the largest Iomega shareholder.
Great Wall is an indirect subsidiary of China Electronics Co., a $16 billion conglomerate which, in turn, is wholly owned by the Chinese government. CEC, which owns 62 percent of Great Wall, will end up with about 25 percent of Iomega through the stock trade transaction, Kampfer said. In summary: When the deal closes, Great Wall will own 43 percent, Iomega itself 32 percent and CEC 25 percent of Iomega. The boards of directors of both Iomega and ExcelStor have unanimously approved the share purchase agreement, Kampfer said.