Planet Lowyat

In an acquisition that promises to create a combined company with over $1 billion in annual revenue, storage manufacturer Iomega has “entered into a definitive share purchase agreement” with ExcelStor Great Wall Technology Limited — another storage firm headquartered in Beijing but doing business out of the Cayman Islands. ExcelStor, a subsidiary of the $2.6 billion Great Wall Technology Company Limited, has been manufacturing certain external hard drives for Iomega since 2004. The deal, still subject to approval, would create an organization with a 3,000-member workforce, led by Iomega’s current executives joined by former ExcelStor management in the positions of Executive Chairman and Chief Administrative Officer.

SAN DIEGO -

Zip disk drive maker Iomega Corp. said Wednesday it agreed to acquire China’s ExcelStor Group from a shareholder of the San Diego company in an all-stock deal that will more than double the number of its outstanding shares.

Financial terms of the deal weren’t disclosed.

Beijing-based ExcelStor is a subsidiary of Iomega (nyse: IOM - news - people ) shareholder Great Wall Technology Co. Ltd. And Great Wall Technology, in turn, is an indirect subsidiary of China Electronics Corp., a Chinese government-owned conglomerate.

Iomega will issue about 84 million shares of its common stock in exchange for all outstanding shares of ExcelStor, which makes hard disk drives and other technology storage devices. The issuance of new shares represents 60 percent of the company’s expected outstanding shares once the deal closes. Iomega had 54.8 million shares outstanding as of Nov. 9.

When the deal closes, Great Wall Technology will hold a majority stake in Iomega - owning about 43 percent of Iomega’s common stock. Following the acquisition, ExcelStor will operate as a wholly owned subsidiary of Iomega.

Iomega said it expects the acquisition, set to close in mid-2008, will boost the company’s earnings. The deal has been approved by both companies’ boards.

ExcelStor had $707.1 million in revenue for 2006.

Shares of Iomega rose 10 cents, or 2.8 percent, to $3.74 in morning trading. The stock has traded between $3.24 and $5.75 in the past year.