10/14/2002 - Oak Technology announced that the company has entered into an agreement to acquire TeraLogic, a leading developer of video/audio processing hardware and software for digital home entertainment platforms. Based in Mountain View, CA, TeraLogic is a privately-held fabless semiconductor company with world-class expertise in advanced video/audio and display processing technology for digital TV, HDTV, and personal digital video recorders (PVR). Prior to the acquisition, strategic investors in TeraLogic included Sony, Samsung and Mitsubishi. The combined businesses further propel Oak's leadership position in the fast growing digital media, digital imaging, and digital home entertainment markets.
Each Company's Board of Directors has unanimously approved the acquisition agreement. The acquisition will be accomplished through a merger pursuant to which TeraLogic's stockholders will receive a cash payment of $38 million. Following the merger, TeraLogic will become a subsidiary of Oak and as a result Oak will become responsible for TeraLogic's debts and obligations including approximately $12 million of prior debt financings and employee obligations. In addition, Oak will reserve 2.2 million shares of the company's common stock for future issuance to the employees of TeraLogic pursuant to options granted to them upon closing the transaction. Further terms of the agreement were not disclosed.
TeraLogic will comprise Oak's new TeraLogic Group. Oak anticipates completing the transaction in the company's second fiscal quarter ending December 31, 2002. The company expects that the acquisition will become accretive in the second half of calendar 2003, and will thereby not delay the company's forecasted return to profitability.
"The acquisition of TeraLogic enables Oak to expand our solutions for the consumer digital entertainment market by complementing Oak's optical recording solutions with TeraLogic's advanced video processing solutions for the digital television, personal video recorder, and digital video recorder markets," said Young Sohn, chairman and CEO of Oak Technology. "TeraLogic is the number one merchant supplier of high definition television (HDTV) chipsets in the world today. The markets opened to us by our acquisition of TeraLogic represent a very large incremental digital home entertainment opportunity for Oak.
Sohn added, "With the increasing availability of digital content including digital video, MP-3, streaming audio, gaming, and digital images, consumers are turning their attention to home appliances to more efficiently receive, manage, store, deliver and present their chosen content. Oak and TeraLogic will be well positioned to meet this expectation."
TeraLogic's production-proven multi-format video decoder technology, and digital home entertainment platforms are at the heart of the architecture of several DTV, set-top box, and PVR products shipping in Japan, the United States, and Korea today. Major OEMs in production with TeraLogic include Sony, Mitsubishi, Samsung, Thompson/RCA, ReplayTV and Toshiba.
"Joining forces with Oak is a natural and complementary fit," said Jon Castor, CEO of TeraLogic. "By combining Oak's strength in optical storage with TeraLogic's video, audio, and display processing technologies we are taking a giant step forward in leading the digital revolution in the living room. Together, with our global partners in consumer electronics, we expect to both continue to lead the HDTV market, as well as accelerate the convergence of digital media in the home."
About Oak Technology
Oak Technology, Inc., a leading provider of solutions for the storage, manipulation and distribution of digital content, is committed to driving the emerging world of connected Information Appliances. The company's fully integrated products and technologies target two key markets: optical storage (CD-RW and DVD for PC and consumer) and digital imaging (advanced copiers, printers, faxes, scanners and MFPs). Founded in 1987, Oak is headquartered in Sunnyvale, Calif., and has sales offices, design centers and research facilities around the world. The company trades on the Nasdaq Stock Exchange under the symbol OAKT.
Founded in 1996, TeraLogic, Inc. designs integrated circuits, software and platforms for digital TV that enable the delivery of compelling entertainment, information and interactive services to the home. With products powered by TeraLogic's technologies, consumers can enjoy crystal clear video and audio, Internet, electronic commerce, electronic program guides and interactive data services. The company's customers and partners include Sony, Mitsubishi, Samsung, Thompson/RCA, Access, Funai, JVC, Kenwood, NDS, NEC, Oren, Panasonic, ReplayTV, Texas Instruments, VividLogic, and Wind River Systems.
Oak Technology is a registered trademark and the Oak logo is a common law tradename.
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