SINGAPORE, March 11, 2002 - Creative Technology Ltd., the worldwide leader in digital entertainment products for users of personal computers and the Internet, will acquire U.S. digital entertainment product firm 3Dlabs Inc. Ltd.
3DLabs, based in the Silicon Valley town of Sunnyvale, outside of San Jose, supplies graphics accelerator solutions like the award-winning Oxygen and Wildcat graphics.
The Singapore-based company, which is famous for its Sound Blaster sound cards and for launching the multimedia revolution, will buy the U.S. firm for a total consideration of $103.7 million, in cash and stocks, it announced Monday. It will pay a combination of $1.20 per share in cash and $2.40 per share in Creative stock for each share of 3Dlabs.
As it already own 1.8 million of 3Dlabs' issued share capital of 30.6 million shares, the cost to acquire the shares that it does not already own is estimated at $34.6 million in cash and $69.1 million of Creative stock.
"As we have analyzed 3Dlabs' product lines, and most importantly their technology road map, we believe that their development of a scalable architecture and general purpose programmability will provide a significant competitive advantage in the graphics space," said Sim Wong Hoo, chairman and CEO of Creative.
"As power gamers' insatiable demand for higher performance graphics capabilities grows, we see great opportunities to expand 3Dlabs' leadership in the ultra high-end professional markets into our higher volume PC consumer desktop markets," he added.
The company explained that the dollar amounts of Creative shares and cash were fixed, but the number of Creative shares to be issued will be determined by the average closing sale price of Creative shares on the Nasdaq exchange over a 10-day period which will end five days prior to 3Dlabs' shareholder approval meeting.
Based on Creative's closing price of $13.10 per share last Friday, this would represent approximately 5.3 million Creative shares to be issued. The total number of Creative shares issued to 3Dlabs' shareholders shall be subject to a cap of approximately 10 million Creative shares.
The acquisition will give the company substantial graphics intellectual property.
Sim said the move offers the company a new opportunity, as is will no longer be a graphics card provider that relies solely upon chips from other vendors. "This enables us to pursue a business model that we believe has the potential for high margins like our audio businesses, while providing even more exciting opportunities for growth and enhancing shareholder value," he said.
Osman Kent, chairman and CEO of 3Dlabs, added, "The timing of this acquisition is fortuitous, as we are close to releasing the most exciting high performance graphics lineup in our history."