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Iomega gobbles up SyQuest for $9.5 million

Storage giant nabs former rival's technology, but leaves its liabilities

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Iomega has announced it has agreed to buy "certain assets" of its erstwhile storage rival SyQuest for a cash payment of $9.5 million. The deal will give Iomega SyQuest's technology and intellectual property plus its inventory and US fixed assets. The purchase is conditional on the transfer of Iomega of inventory and equipment from SyQuest's Malaysian subsidiary. However, the agreement does not transfer any of SyQuest's liabilities or material obligations, such as warranties and customer support, or any debts owed to SyQuest by third partes. All these will remain the responsibility of SyQuest itself. The deal follows SyQuest's collapse and filing for Chapter 11 protection in November 1998. Soon after, SyQuest lawyers announced it was pursuing a buyer, and Iomega was widely tipped as the most likely purchaser. Last week, SyQuest's Web site became active again to provide customer support and technical information (see SyQuest re-emerges from oblivion). The company's lawyers said a deal was in the offing and that it hoped to get SyQyuest up and running normally very shortly. While the deal will effectively see the end of SyQuest as a force in the storage market -- with no intellectual property or fixed assets, there's not a lot it can do -- it is good news for the many owners of malfunctioning SyQuest kit, much of it held at the company's premises for repair. With a $9.5 million cash injection, what's left of the company should be able to get working drives back to their owners. However, the fact that Iomega was in a position to dictate terms -- ie. we want all the important stuff but none of the liabilities -- suggests SyQuest was in a parlous state indeed. ®

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