Oak to Acquire TeraLogic for $38M

-October 08, 2002

Oak Technology Inc. today said it has struck a deal to acquire privately held TeraLogic Inc., a developer of video and audio processing hardware and software used in digital home entertainment systems.

Sunnyvale, Calif.-based Oak Technology said the $38 million merger would strengthen its standing in the consumer market for digital home entertainment applications.

TeraLogic is a fables company based in Mountain View, Calif. The company specializes in advanced video/audio and display processing technology for digital TV, high-definition TV (HDTV), and personal digital video recorders. Investors in the company have included Sony, Samsung and Mitsubishi.

"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, in a statement. "TeraLogic is the No. 1 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.

The merger has been approved by both companies’ boards of directors. Under terms of the deal, TeraLogic shareholders will receive a cash payment of $38 million. Following the merger, TeraLogic will become a subsidiary of Oak, which will then become responsible for TeraLogic’s debts and obligations, including about $12 million of prior debt financings and employee obligations. Oak also said it would 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.

Once the acquisition is completed, TeraLogic will become Oak’s TeraLogic Group. The deal is expected to close in the company’s fiscal Q2, which ends Dec. 31.

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