STMicroelectronics said it will spend $336 million in cash to acquire all the outstanding shares of Genesis Microchip, which produces chips for use in flat panel displays and LCD monitors. The offer represents a 60 percent premium over the closing price for Genesis stock on the day prior to the announcement.
The acquisition of Genesis is expected to further ST's goal of achieving technical leadership in digital multimedia applications by complementing the company's "substantial expertise in MPEG video compression and decompression with Genesis' processing technology," said Philippe Lambinet, the general manager of ST's Home Entertainment & Displays Group.
"We see ourselves as adding a missing ingredient to our own product portfolio -- a technology portfolio which will allow for improved market offerings in the digital TV market, which is expected to be the fastest growing application within the consumer market segment," Lambinet explained.
In particular, Lambinet added, ST believes that Genesis' innovative DisplayPort technology will provide the company with "expanded opportunities in the PC and home entertainment markets."
Released last April by the Video Electronics Standards Association (VESA), the DisplayPort standard provides the requisite interconnect for transporting digital audio and video signals between a set-top box and a home theater system, for example, or between the computing and display segments within a laptop PC.
DisplayPort also incorporates optional copy-protection technology from AMD. Other supporters of the new interconnect standard include industry giants Dell, Hewlett-Packard, Intel, Lenovo, Nvidia, Philips, and Samsung.
DisplayPort's main competitor is the High-Definition Multimedia Interface (HDMI) standard used by most of today's high-definition TV sets. According to Genesis, the beauty of DisplayPort is that it consolidates internal and external connection methods in ways that reduce device complexity.
Moreover, Genesis notes that DisplayPort improves upon HDMI by delivering the necessary performance scalability for enabling next-generation displays to produce higher color depths, refresh rates, and display resolutions.
"With our DisplayPort interconnect we have the opportunity to deliver a truly disruptive technology, starting with LCD monitors and migrating rapidly both to computers as well as to flat-panel TVs and other consumer electronic market segments," said Genesis Microchip CEO Elias Antoun.
Closing the deal
Looking beyond DisplayPort, the back-end DTV processing technologies that Genesis has already developed are expected to complement ST's own front-end offerings. Moreover, ST's digital video compression capabilities should benefit from the addition of Genesis' motion-compensation technology, which is expected to improve upon existing methods for compressing and decompressing the codes for displaying objects in motion on TV screens.
ST's acquisition of Genesis, which has already been approved by the latter company's board of directors, is expected to be completed in the first quarter of 2008, subject to regulatory approval. On closing, Genesis will become part of ST's Home Entertainment & Displays Group.
Genesis, which holds 210 U.S. and foreign patents, reported revenues of $191 million during the 12 months ended September 30. Based in Santa Clara, California, Genesis also has design centers in Toronto, Bangalore, and Taiwan.