SANTA CLARA, Calif.--Graphics chip maker S3 Inc. today announced it has signed an agreement to acquire substantially all of the assets of Number Nine Visual Technology Corp., a video/graphics hardware and software company that filed for bankruptcy protection today.
By acquiring Number Nine, a contract supplier of S3-based video and graphics boards to IBM Corp., S3 hopes to become a single-source supplier of both chips and boards to IBM, while also absorbing the Number Nine hardware and software engineering resources.
"Over the past year, we have been working with IBM to build a long-term business relationship based on a supplier agreement with Number Nine," said Ken Potashner, CEO of S3. "We expect that our acquisition of Number Nine's assets will enable us to streamline this business model and further strengthen our direct relationship with IBM."
According to Number Nine, of Lexington, Mass.,the assets it is selling to S3 amount to $4.8 million. A portion of the purchase will be in cash and a portion may be S3 common stock. In addition, the two parties are in the process of completing a definitive sale agreement for submission to the bankruptcy court.
Pursuant to U.S. Bankruptcy Code, S3's bid is subject to higher and better offers. The completion of the transaction is subject to customary terms and conditions as well as bankruptcy court and regulatory approval.
Wallace Smith arrived as president and CEO of Number Nine last summer. "We have been actively trying to raise additional capital for the company since my arrival," he said. "Given Number Nine's present total liabilities, it has been a very difficult situation. After studying a variety of strategic, operational and financial alternatives, it has become quite clear that the best interests of our stakeholders would be served by seeking a sale of the company through court protection."
Although Smith said he was disappointed that Number Nine could not complete its turnaround, "I am pleased that we will be able to repay a significant portion of the outstanding liabilities and that S3 will be given the opportunity to continue to serve and support our customers around the world."