Seeking to bolster its position in the digital TV market, Europe’s largest maker of semiconductors announced today that it will pay $336 million to buy Genesis Microchip of Santa Clara, the world’s biggest maker of chips for flat-panel TVs and computer screens.
STMicroelectronics NV of Geneva will pay $8.65 per share of Genesis stock, a 60 percent premium over Monday’s closing price and 26 percent more than the slumping stock’s average price over the past 60 trading days. After hitting a 52-week high of $11.16 on July 19, Genesis’ stock has sagged to a low of $4.90 on Dec. 4.
After the announcement, Genesis stock vaulted about $3.09 – or 57 percent – to about $8.50 close to the end of trading today.
Genesis went public at $11.50 a share in February 1998.
Genesis’ board approved the offer, which STMicroelectronics expects to initiate next Tuesday and conclude in the first quarter of 2008. Genesis’ chief executive Elias Antoun will head STMicroelectronics’ TV and display initiatives.
The deal will combine STMicroelectronics’ “front-end” processing technologies with Genesis’ “back-end” image and video processing technologies, STMicroelectronics said.
Genesis’ sales of digital video chips tumbled to $215 million in the fiscal year ended March 31, down 20 percent from nearly $270 million in 2006.
Sales of digital TV units are expected to rise 50 percent this year. Demand for LCD televisions probably will increase next year as they take market share from plasma screens, according to a forecast by UBS AG analysts this month.
Contact Mark Schwanhausser at mschwanhausser@mercurynews.com or (408) 920-5543.
