TORONTO, Ontario - Feb. 16, 2000 - ATI Technologies Inc., a maker of graphics accelerator chips, agreed Wednesday to buy chip developer ArtX Inc. for about $400 million in stock, in a move that brings ATI into the market for game consoles and other electronic appliances.
As part of the deal, Ontario-based ATI will pay 24.6 million shares and 8 million options to ArtX, a Palo Alto, Calif.-based provider of graphics chips and components used by Nintendo and other leading Japanese companies. The deal is expected to close in four weeks.
ATI, which is looking to expand its market from computers to appliances, said it expects the purchase to increase its earnings after the third quarter, adding up to one cent per share to its earnings in 2001 and as much as 15 cents per share to its income in 2002.
Following the announcement Wednesday morning, shares of ATI Technologies (ATYT: Research, Estimates) rose 7/8 to close at 15-7/8 in Nasdaq trading. ArtX is privately held.
K.Y. Ho, chairman and chief executive of ATI, said, "This acquisition accelerates the implementation of our longer-term strategic plan to be a key supplier to both the PC and consumer electronics industries. Our reach now encompasses all major types of e-appliances, including set-top boxes, game consoles and video playback devices."
ATI recorded fiscal 1999 revenue of 1.2 billion, with a net income of $107 million. Three-year-old ArtX recorded $10 million in revenue in fiscal 1999, but the 70-employee firm projects massive growth with sales expected to reach $300 million in 2003.
ATI announced Monday that Japanese powerhouse Sony Corp. will include ATI's chips in digital set-top boxes, which are used to receive digital data from cable operators, allowing high-speed digital services such as Internet access.
Dave Orton, president and chief executive of ArtX, will join ATI in a new position of president and chief operating officer, and ArtX co-founder and chairman Wei Yen will join ATI's board of directors.