S3 plans to buy Diamond Multimedia

With an eye on the growing home networking and Internet appliance markets, S3 intends to buy Diamond Multimedia Systems in a stock deal expected to close in October.

S3, based in the US, is broadening its focus from PC graphics and video accelerators with the acquisition. Diamond Multimedia provides PC multimedia and Internet connectivity products; the company is also known for its Rio MP3 music player and HomeFree home networking system.

S3 also said in a recent statement that it plans to capitalise on the strengths of the merged companies to expand its range in its current graphics business by becoming a provider of complete systems including silicon, software and PC boards.

Details regarding how Diamond employees will be integrated into the merged company was not provided. S3 will offer 0.52 shares of S3 common stock for every share of Diamond stock and will assume Diamond's outstanding options, the statement said. Diamond Multimedia has approximately 35.3 million shares outstanding.

S3 stock closed yesterday at $US9.43 per share, while Diamond ended the trading day at $US5.68 per share.

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Nancy Weil

PC World

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