Phone Accessory Maker Zagg Scoops Up Rival iFrogz

If anyone needed another indication of just how big the smartphone accessory business has gotten, look no further than Tuesday’s move by Salt Lake City-based Zagg to acquire rival iFrogz for $105 million in stock and cash.

Though the number is a bit eye-popping, Zagg CEO Robert G. Pedersen II told AllThingsD that the deal should be immediately accretive to the earnings of his company, which is best known for its Invisible Shield line of screen protectors.

“With smartphones getting more expensive, people are willing to spend on their accessories,” Pedersen said in a phone interview shortly after the deal was announced. “It’s just exploded, this industry, especially with the entree of the tablet.”

Zagg’s plan is to operate iFrogz, which is located about 90 minutes away in Logan, Utah, as a separate subsidiary and keep it focused on the kinds of cases and headphones that it has been making.

“Even though we have been pseudo-competitors in this marketplace, they have been heavily into lifestyle cases and lifestyle audio and we have not ventured into that area,” Pedersen said.

Last year iFrogz generated $40.9 million of revenue, and Zagg said on Tuesday that iFrogz is expected to generate more than $60 million of revenue for 2011, with operating margins similar to those that Zagg has been forecasting for its own business.

“They are already very profitable and very lean,” Pedersen said. “We will be very slow to make any major changes.”

Zagg will pick up some of iFrogz retail relationships, in particular the business that iFrogz does selling at Wal-Mart.

Pedersen said that Zagg didn’t find itself in a bidding war for iFrogz. “We were already friends,” he said. “They felt like it was a very fair price.”