However, Tualatin, Oregon-based Pixelworks’ stock fell 20.39% to $6.09 on news of the deal amid skepticism about whether it had got the best out of the deal. Alviso, California-based Genesis will own 62.5% of the merged company. The two companies had combined revenue of $298m in 2002 and $641m of total assets, including $220m of cash and marketable securities, which leaves considerable scope for further acquisitions.
The idea behind the merger is to offer a broad line of display controllers to manufacturers of LCD monitors, TVs and multimedia projectors. The transaction is expected to close in the third quarter of this year and the companies expect it to be accretive to earnings, before merger-related charges, in the first quarter of combined operations. Management is expecting operating cost synergies of $4m a quarter after the merger.
There is a vast array of companies in the market with which the combined company will compete and, in its latest SEC filing, Genesis listed its competitors as Micronas, Macronix International, Media Reality Technologies, Morningstar Semiconductor, Philips Semiconductors, Pixelworks, Realtek Semiconductor, Silicon Image, SmartASIC, ST Microelectronics, Topro Technology, Trident Microsystems. and Trumpion Microelectronics. Consolidation in the business still has a considerable way to go.
Source: Computerwire
