Creative Technology Ltd., maker of digital entertainment products such as its Sound Blaster sound card, has agreed to purchase the remaining shares of graphics vendor 3Dlabs Inc. Ltd., in a deal valued at US$170 million.
Announcement of the deal Monday marks Creative's re-entry into the graphics market, after moving away from the market a couple years ago to focus its core technologies, such as audio.
Financially troubled 3Dlabs said in a statement Monday that it would continue to supply, support and develop its product lines under terms of the agreement.
Singapore-based Creative said that it will purchase the company's stock at $3.60 a share, two-thirds of which will be converted to Creative stock and one-third to cash. If the deal is approved by both companies' board of directors as well as regulatory agencies, 3Dlabs shareholders will receive $1.20 in cash and Creative ordinary shares with a value of $2.40 for each share of 3Dlabs.
Creative is already a shareholder of 3Dlabs, and has collaborated with the company on 3D gaming boards, graphics processors and other products.
Sunnyvale, California-based 3Dlabs said that although the company has been experiencing financial difficulties recently, it expects the deal with Creative to allow it to make a splash with the upcoming release of its new graphics processors for the desktop.
Also Monday, 3Dlabs reported a 2001 fourth-quarter net loss of $20.4 million, or $0.67 per share, compared to a net loss of $3.7 million, or $0.17 per share, in the fourth quarter of 2000. Revenue for the fourth-quarter came in at $10.1 million, less than half of the $24 million the company reported in the fourth quarter of 2000.
Despite recent pessimism about the health of the graphics industry, stock in Creative (CREAF) inched up $0.13, or 1 percent, to $13.10 a share after the deal was announced Monday morning.