On March 11, 3Dlabs announced that it signed a definitive agreement with Creative Technology to be acquired in a stock and cash transaction. Creative will purchase 3Dlabs stock at $3.60 per share, with two-thirds being converted to Creative stock and one-third to cash, valuing the company at approximately $170 million.
The companies expect that the combination of 3Dlabs’ technology and Creative’s manufacturing, financial and distribution resources will enhance the development of 3Dlabs’ planned products, which includes an anticipated re-entry into the volume desktop graphics market. Creative, a shareholder of 3Dlabs, has enjoyed a close relationship with 3Dlabs since the company’s inception in 1994. The two companies jointly launched the industry’s first 3D gaming board in 1995 and enjoyed significant mutual success with the Permedia 2 family of graphics processors.
3Dlabs will continue to supply, support and develop all of its product lines, including Wildcat® and Oxygen®, with no expected disruption in supply to any of its customers. 3Dlabs will also continue to supply and support its chip and IP products to its embedded customers and will carry on its standardization activities with OpenGL 2.0, OpenML and embedded OpenGL in the Khronos Group and the Web3D Consortium.
“We see great opportunities to leverage 3Dlabs’ high-end professional market leadership into higher volume PC desktop products that satisfy power gamers’ insatiable demand for faster graphics,” said Sim Wong Hoo, chairman and CEO of Creative. “We have analyzed 3Dlabs’ forthcoming products and technology roadmap and we believe that their development of a scalable visual processing architecture with new levels of programmability and flexibility will provide a significant competitive advantage in the graphics space. The technological breakthroughs that 3Dlabs has achieved to date, coupled with the strong market we see for high-performance graphics processors, provide a tremendous growth opportunity for our company.”
“We are very excited about the opportunity provided by Creative’s worldwide distribution network, huge customer base, world-famous brands, and financial resources to maximize the technology we produce,” said Osman Kent, chairman and CEO of 3Dlabs. “Integrating the resources and expertise of these two industry-leading companies can create a truly potent force in the graphics market.”
Kent continued, “The timing of this acquisition is fortuitous, as we are close to releasing the most exciting high-performance graphics lineup in our history. We have experienced a difficult financial period during which we continued to devote significant resources to the development of our breakthrough technologies. Creative can provide us the resources and opportunity to expand our leadership position beyond the high-end professional graphics market. We can leverage Creative’s vast experience at building global brands and market share to take full advantage of the market potential for our upcoming release of an exciting new family of graphics processors for the desktop.”
Under the terms of the agreement, unanimously approved by the boards of directors of both companies, 3Dlabs shareholders will receive $1.20 in cash and Creative ordinary shares with a value of $2.40 (such shares generally to be valued based on the average closing price on Nasdaq for the 10 trading days ending on the fifth trading day prior to the 3Dlabs’ shareholder meeting to approve the transaction) for each share of 3Dlabs. Closing of the transaction is subject to the approval of 3Dlabs shareholders, expiration of the US HSR antitrust waiting period and other customary closing conditions.
Article translated by Richard So and edited by Richard So
