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ST to boost DTV initiatives with Genesis acquisition

Posted: 13 Dec 2007 ?? ?Print Version ?Bookmark and Share

Keywords:DTV? ST initiatives? Genesis acquisition?

STMicroelectronics and Genesis Microchip Inc. have announced that they have entered into a definitive agreement for ST to acquire Genesis.

Under the terms of the agreement, ST will commence a cash tender offer to purchase all of the outstanding shares of Genesis for $8.65 per share, net to the holder in cash, implying a total equity value of approximately $336 million. Following completion of the tender offer, ST will complete a second-step merger in which any remaining common shares of Genesis will be converted into the right to receive the same per share price paid in the tender offer. The offer price represents a premium of 60 percent to Genesis' Dec. 10 closing share price and 26 percent to the average closing share price during the last 60 trading days prior to the announcement of the acquisition.

During the 12 months ended Sept. 30, Genesis reported revenues of $191 million. As of Sept. 30, Genesis' cash and cash equivalents and short-term investments totaled approximately $183 million. ST will finance the acquisition using existing cash on its balance sheet.

The acquisition has been approved by the Board of Directors of Genesis, which has unanimously recommended that holders of Genesis' common stock accept the tender offer and approve the second-step merger. The tender offer, which ST expects to commence no later than Dec. 18, and the second-step merger, are both subject to customary conditions, including receipt of regulatory approvals, and are expected to be completed Q1 2008.

Through this acquisition, ST expects to expand its foothold in the $1.5 billion DTV market, one of the fastest growing segments in consumer semiconductors. Genesis will enhance ST's technological capabilities for the transition to fully digital solutions in this segment and strengthen its product and intellectual-property portfolio.

"STMicroelectronics is a leader in digital consumer technologies, with a strong position in set-top box compression and decompression technologies and 'front end' processing technologies in digital TV. Genesis is a leader in 'back-end' image and video processing and digital interconnect technologies," said Philippe Lambinet, corporate VP and general manager of ST's home entertainment & displays group. "The combined company will have the products, technology, IP and expertise to offer best-in-class integrated DTV processing solutions that our customers are increasingly demanding. We also believe that the Genesis DisplayPort technology brings expanded opportunities to the PC and home entertainment markets."

"This combination represents an exciting opportunity for Genesis," said Elias Antoun, Genesis president and CEO. "Joining forces with ST will put us in the best position to ensure that our products and technologies remain at the forefront of our industry. Our innovative technology, when combined with ST's resources, silicon design expertise and manufacturing capabilities can accelerate the delivery of the next generation of solutions for our digital television, flat-panel display and DisplayPort customer base."

On closing, Genesis will become part of ST's home entertainment & displays group. Elias Antoun will join ST and will lead ST's TV and display initiatives, reporting to Philippe Lambinet.

Morgan Stanley acted as exclusive financial advisor to ST and Shearman & Sterling LLP acted as legal counsel. Goldman Sachs acted as exclusive financial advisor to Genesis and Wilson Sonsini Goodrich & Rosati Professional Corp. acted as legal counsel.




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