SAN JOSE -- Genesis Microchip Inc. here today announced plans to acquire digital display processor supplier Sage Inc. in nearby Milpitas for $241 million in stock to expand growth in consumer video IC applications worldwide.
Under an acquisition agreement, Genesis will issue 0.571 shares of its stock for each outstanding Sage share. The transaction is expected to be completed in early 2002.
"The strategic merits of this combination are compelling," said Amnon Fisher, chief executive officer of Genesis, which is a fabless supplier of ICs and software for a range of display systems. The CEO added that the acquisition will enable Genesis "accelerate its growth in consumer video ICs by capitalizing on Sage's technological capabilities and the 'Faroudja' brand name."
Last year, Sage acquired Sunnyvale, Calif.-based Faroudja Inc., a supplier of ASICs for high-definition TV and other video applications, for about $155 million in stock. Seven-year-old Sage had revenue of $8.1 million in the fiscal quarter, ended June 30, which was up 21% sequentially from $6.7 million in the prior period. Sage posted a net loss of $2.7 million in the quarter, ended June 30.
Genesis Microchip said the merger of operations with Sage is expected to reduce costs from purchasing, manufacturing, sales, and administration operations. Including synergies and excluding one-time charges, the transaction is expected to be accretive to Genesis's earnings per share in the first full quarter of combined operations.
Sage chief executive officer Chandra Reddy said the combination will allow the two companies to build on a "strong engineering heritage."
"With nearly 200 engineers, the combined company will have the critical R&D mass to aggressively pursue future opportunities," said Reddy, who will join the Genesis board of directors as vice chairman and hold the position as executive vice president of engineering once the acquisition is completed.