Pixelworks, a provider of system-on-a-chip ICs for the display market, has signed a definitive agreement to acquire nDSP Corporation, a privately held fabless semiconductor company.
nDSP’s patent-pending video processing technology improves television image quality through frame rate conversion, interlaced to progressive scan conversion, noise reduction, motion compensation, sharpness enhancement, and resolution enhancement.
nDSP chips will join Pixelworks’ SignalProcessor product line and will complement Pixelworks’ ImageProcessor system-on-a-chip ICs and the reconfigurable DSP video processing technology from Jaldi Semiconductor.
‘nDSP brings us 24 development and support engineers located in Beijing and Shenzhen, establishing our presence in China where over one third of the world’s televisions are manufactured today. We expect to see more and more display products manufactured in China, so expanding our presence there is of great importance,’ said Allen Alley, President, CEO and Chairman of Pixelworks.
nDSP Corporation was founded in 1997 and received venture financing from VantagePoint Venture Partners, TechFund Capital II and TechFarm Ventures, Maton Venture and Crown Growth Partners.
In connection with the acquisition, Pixelworks will issue approximately 1.2 million shares of its Common Stock representing approximately 3% of total outstanding shares of Pixelworks Common Stock in exchange for all outstanding shares of nDSP capital stock.
The merger transaction is expected to close within 45 days and will be accounted for under the purchase method of accounting. The boards of directors of both companies have approved the merger, which awaits approval by nDSP shareholders and the satisfaction of regulatory requirements and other customary closing conditions.
Pixelworks expects to record a one-time write-off in the quarter ending March 31, 2002 for purchased in-process research and development expenses related to the acquisition.
Pixelworks currently expects nDSP to generate revenue of approximately $500,000 in the quarter ending March 31, 2002, and approximately $5.0 to $7.0 million for the year ending December 31, 2002. Pixelworks believes the acquisition of nDSP will be accretive to pro forma earnings per share by the third quarter of 2002, which ends September 30, 2002.