San Jose, Calif. and Tualatin, Ore., March 17, 2003 — Genesis Microchip Inc. (Nasdaq: GNSS) and Pixelworks, Inc. (Nasdaq: PXLW), announced today the execution of a definitive merger agreement. The new company, to be called Genesis Pixelworks, is positioned to become a leading provider of system-on-a-chip ICs for the rapidly growing display and consumer electronics industries. The companies are combining their respective technical and financial resources to accelerate the development of new, innovative technologies and products that customers require in these dynamic industries. Upon the closing and successful integration of the transaction, Genesis Microchip and Pixelworks believe that the combined company will be able to offer a broad line of the industry’s best display controller solutions to the manufacturers of LCD monitors, televisions, and multimedia projectors.
Under the terms of the agreement, unanimously approved by both Boards of Directors, Pixelworks will issue 2.3366 shares of Pixelworks common stock for each outstanding share of Genesis Microchip common stock and will issue Pixelworks stock options for Genesis stock options based on the same exchange ratio. Based on Pixelworks’ closing stock price of $7.65 per share on March 14, 2003, the transaction is valued at approximately $600 million. Following the transaction, Genesis Microchip’s shareholders will own approximately 62.5% and Pixelworks shareholders 37.5% of the merged company, on a fully diluted basis.
The combined company expects the transaction to be accretive to Pixelworks’ earnings per share on a pro forma* basis in the first full quarter of combined operations, excluding merger-related and other charges. The management of Genesis Microchip and Pixelworks currently anticipate operating cost synergies of approximately $4 million per quarter, post integration. Subject to shareholder approvals and other customary closing conditions, the transaction is expected to close in the third quarter of calendar 2003.
The Board of Directors of the combined company will consist of four directors from Genesis Microchip and four directors from Pixelworks. One additional director will be designated by Pixelworks directors, subject to reasonable acceptance by Genesis Microchip directors.
Management of the combined company will be shared. James Donegan, currently the Chairman and CEO of Genesis Microchip, will become Chairman of the Board for the combined company. Allen Alley, Chairman, President and CEO of Pixelworks, will become the President and CEO of the combined company. The Chief Financial Officer of the combined entity will be Jeff Bouchard, Chief Financial Officer of Pixelworks. Eric Erdman, the current Chief Financial Officer of Genesis Microchip, will become Executive Vice President of Corporate Development of the combined company. Hans Olsen, Pixelworks Executive Vice President and Chief Operating Officer will become the Executive Vice President and Chief Operating Officer of the new company and Anders Frisk, Chief Operating Officer of Genesis Microchip, will become Executive Vice President of Products and Marketing.
The merged entity, incorporated in Oregon, will be headquartered in Alviso, CA, and retain a significant presence in Pixelworks’ current headquarters in Tualatin, OR.
“We believe that our merger with Pixelworks benefits Genesis Microchip shareholders by immediately bringing a strong revenue stream from Pixelworks’ projector business – a business that is related and complementary to our core monitor business – while providing greater resources to focus on the technology challenges faced in the rapidly growing flat panel TV area. Additionally, it provides a stronger balance sheet and more cost-effective operations necessary to lead in this intensely competitive industry,” said James Donegan, Chairman and CEO of Genesis Microchip. “This is a decisive step towards creating a technology leader able to deliver multiple product lines, new innovative technologies, and greater value to our global customers.”
“We believe this represents a tremendous opportunity for both our customers and shareholders,” said Allen Alley, Chairman and CEO of Pixelworks. “This combination will allow us to maximize the potential of our extensive complementary technology portfolios to provide higher levels of integration across all of our served business segments, enabling us to deliver higher performance, more cost effective next-generation solutions to our customers. In addition, as both existing and new customers enter the expanding applications for advanced display products, such as transportation, portable video and networked displays, we will be positioned to offer the compelling solutions to support this growth opportunity,” Alley added.
Dresdner Kleinwort Wasserstein is acting as financial advisor to Genesis Microchip with regard to the transaction, and Salomon Smith Barney is advising Pixelworks.
About Genesis Microchip Inc.
Genesis Microchip Inc. (Nasdaq: GNSS) is a leading provider of image processing systems enabling superior picture quality for a variety of consumer and PC-display products. Featuring Genesis Display Perfection(TM) technologies and Emmy-award winning Faroudja® video technology, Genesis system-on-a-chip solutions are used worldwide by display manufacturers to produce visibly better images across a broad set of devices including flat-panel displays, digital TVs, digital CRTs, projectors and DVD players. The Genesis technology portfolio features 135 patents, including analog and mixed signal system-on-a-chip design, DCDi(TM) by Faroudja deinterlacing, TrueLife(TM) video enhancement and IntelliComb(TM) video decoding. Founded in 1987, Genesis supports its leading brand-name customers with offices in the U.S., Canada, India, Taiwan, Korea, China and Japan. For more information about Genesis Microchip Inc. or Genesis Display Perfection(TM) technologies, please visit www.genesis-microchip.com.
About Pixelworks, Inc.
Pixelworks, headquartered in Tualatin, Oregon, is a leading provider of system-on-a-chip ICs for the advanced display market. Pixelworks' solutions process and optimize video, computer graphics and Web information for display on a wide variety of devices used in business and consumer markets, including flat-panel monitors, digital televisions and multimedia projectors. Our broad IC product line is used by the world's leading manufacturers of consumer electronics and computer display products to enhance image quality and ease of use. For more information, please visit the company's Web site at http://www.pixelworks.com/.