Diamond Multimedia Systems Inc, the San Jose, California-based maker of PC graphics accelerators and modems is to make an all cash offer of $31.6m (or $2.45 per share) for Micronics Computers Inc, the supplier of system boards for PCs and servers. The offer has been approved by the boards of both companies, and subject to regulatory approval, the two hope to merge before the end of June. The offer gives Micronics’ shareholders a 24% premium over Monday’s closing price of $1.97, but it’s still well below the 52 week high of $3.56 reached in June last year. The logic behind the deal is to enable the manufacture of super-cheap multimedia systems boards for the highly competitive, sub-$1,000 PC market by combining the two companies core areas of expertise. The two will also aim at the emerging markets for set top boxes and other non-PC internet appliances. Additionally, Diamond hopes to boost Micronics’ flagging mother board sales by pushing its existing products through Diamond’s own sales and support network. Micronics, which is based in Fremont, California, turned over just $100m last year, down from $170m the year before, and the company has been loss making for the last three years. The deal is dependent upon at least 51% of Micronics’ shares being tendered and Micronics is prepared to throw its own cash reserves of $20m into the deal by buying back and extinguishing its own stock. รก
