Singapore's Creative to buy 3DLabs


Creative plans to add 3DLabs' high-end graphics to its sound card capabilities

SINGAPORE (CNN) -- Singapore high-tech company Creative Technology said Monday it will pay $103.7 million in cash and stock for U.S. computer graphics company 3Dlabs.

Creative, the maker of Sound Blaster sound cards for computers, said the deal will allow it to use 3DLabs' graphics capability in PCs to meet the demands of "power gamers".

Creative will pay $1.20 cash and $2.40 in Creative stock for each share of 3Dlabs it does not already own.

The price is a premium of about 20 percent to 3Dlabs' last closing price of $2.95.

Creative already holds 1.8 million of the 30.6 million 3Dlabs shares on issue.

In addition, Creative owns warrants and convertible notes which, when exercised and converted, would provide an additional 9.4 million shares and give Creative about 28 percent beneficial ownership of the then-total outstanding 3Dlabs shares.

Cash and stock deal

Creative said the cost to buy those shares it does not already own is estimated at $34.6 million in cash and $69.1 million of Creative stock for a total of $103.7 million.

Creative said that based on its closing share price of $13.10 (S$23.40) last Friday, this would represent about 5.3 million Creative shares to be issued. There is a 10 million cap on the total number of Creative shares that can be issued.

On completion, 3Dlabs will become a wholly owned subsidiary of Creative.

"We have had a tremendous track record of choosing winning graphics technologies and partners over the years, and helping build them into No. 1 market share positions," Creative CEO Sim Wong Hoo said in a statement to the Singapore Stock Exchange Monday.

"We've helped those companies become very successful in the process," Sim said.

Sim said that as power gamers demand higher performance graphics capabilities, Creative saw "great opportunities" to expand 3Dlabs' leadership in the ultra high-end professional markets into Creative's higher volume PC consumer desktop markets.

'Teraops' chip

3Dlabs' next chipsets include the world's first single-chip "teraops" (trillion operations per second) visual processor with general purpose programming ability.

Sim said Creative already owned the world's highest performance audio silicon technology.

"With our announcement today, we will also own the world's highest performance graphics technology and a leadership position in the ultra high-end graphics space.

Sim said Creative believed the acquisition could add to earnings in the first half of 2003.

3Dlabs CEO Osman Kent called the timing of the deal "fortuitous", given that the company had experienced a difficult financial period but was now close to releasing "the most exciting high performance graphics lineup in our history".