Zoran, Oak Technology Merger Target Digital Consumer, Imaging Markets

5/12/2003 - Zoran Corporation (Nasdaq NM:ZRAN), a leading provider of digital solutions-on-a-chip for the DVD and digital camera markets, and Oak Technology, Inc. (Nasdaq NM:OAKT), a leading provider of embedded solutions for the HDTV and digital imaging markets, announced they have signed a definitive merger agreement. The combined company is positioned to become a global leader in high-growth digital consumer and imaging markets.

Under the terms of the agreement unanimously approved by the respective Boards of Directors, each outstanding share of Oak's common stock will be exchanged for 0.2323 of a share of Zoran common stock and cash in an amount equal to $1.78. Outstanding options to purchase Oak stock will be assumed by Zoran. Total cash and stock consideration represents $5.88 per share based on the closing stock prices on Friday, May 2 2003. The total merger consideration is valued at $358 million including $100 million in cash. Following the transaction, Zoran and Oak stockholders will own approximately 66.6 percent and 33.4 percent, respectively, of the combined company on a fully diluted basis.

The transaction is expected to be completed in the third quarter of 2003 and is subject to approval by the stockholders of both companies as well as regulatory approval. Zoran expects the transaction to be accretive to the company's earnings before amortization and goodwill in the first half of 2004.

The management teams of Zoran and Oak will be combined to address the expanded opportunities created by the merger under the leadership of Dr. Levy Gerzberg, Zoran's president and chief executive officer who will continue as president and chief executive officer of the combined company. The Zoran Board of Directors will be increased to nine members and will include three members of the current Oak Board.

"This strategic merger brings together two companies with considerable expertise in delivering innovative solutions to multiple fast-growing consumer markets," said Dr. Levy Gerzberg. "As the technology and market share leader in HDTV and printer IC and software solutions, Oak complements Zoran's product integration roadmap. By combining our technology portfolios, customer bases and worldwide sales infrastructures, we are in a strong position to lead the transition from analog to digital in the home. Together, Zoran and Oak should benefit from a more diversified revenue stream and customer base. Moreover, we anticipate accelerated revenue growth opportunities and potential cost synergies of $13 to $18 million annually, beginning in 2004."

"We are extremely excited to be joining forces with Zoran in this compelling strategic combination," said Young Sohn, president and chief executive officer of Oak. "We believe our success in the HDTV and imaging markets will add significant value to the merged company by accelerating Zoran's current digital TV strategy and enhancing future opportunities for its digital camera product line. By leveraging our respective leadership positions and global presence in DVD, digital camera, digital TV and printer markets, we believe we will be able to drive efficiencies in sales channels and manufacturing costs. With multiple products we will be uniquely positioned to capitalize on the ongoing growth in key consumer electronics markets."

Merrill Lynch acted as exclusive financial advisor to Zoran and Morgan Stanley acted as exclusive financial advisor to Oak.

About Zoran
Zoran Corporation, based in Santa Clara, California, is a leading provider of digital solutions-on-a-chip for applications in the growing consumer electronics markets. With two decades of expertise developing and delivering digital signal processing technologies, Zoran has pioneered high-performance digital audio, video, and imaging applications. Zoran's proficiency in integration delivers major benefits for OEM customers, including greater capabilities within each product generation, reduced system costs, and shorter time to market. Zoran-based DVD products and digital cameras have received recognition for excellence and are now in millions of homes worldwide. With headquarters in the U.S. and operations in Canada, China, Hong Kong, Israel, Japan, Korea and Taiwan, Zoran may be contacted on the World Wide Web at www.zoran.com or at 408-919-4111.

About Oak
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 consumer appliances. The company's fully integrated products and technologies target two key markets: digital imaging (advanced copiers, printers, faxes, scanners and MFPs) and digital home entertainment (digital TV, HDTV and PVRs). Founded in 1987, Oak is headquartered in Sunnyvale, California, and has sales offices, design centers and research facilities in Japan, Korea, Taiwan, the U.K., Germany and the U.S. The company trades on the Nasdaq Stock Exchange under the symbol OAKT. Additional information about Oak and its digital solutions can be found at www.oaktech.com.

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