Not a rumor anymore.
biz.yahoo.com
S3 Enters Internet Appliance and Home
Networking Markets Through Acquisition of
Diamond Multimedia Systems Inc.
SANTA CLARA, Calif.--(BUSINESS WIRE)--June 22, 1999---S3®
Incorporated (Nasdaq:SIII - news) today announced that it has entered into a definitive agreement to acquire Diamond
Multimedia Systems, Inc. (Nasdaq:DIMD - news), a leading supplier of PC Multimedia and Internet connectivity
solutions. In a strategic move to capitalize on high-growth areas, S3 expects to emerge as a key player in the Internet
appliance and home networking markets. S3 also plans to maximize the two companies' multimedia strengths to become
a total solutions provider (silicon, software and PC boards) for its graphics business.
''Today's announcement represents a significant strategic shift for S3, which was focused solely on the PC graphics
market,'' said Ken Potashner, president and CEO of S3 Incorporated. ''By merging the strengths of both companies,
we intend to create a major force in the industry for Internet appliances, broadband communications, home networking
and complete graphics solutions.''
Added Potashner, ''The acquisition is part of our ongoing strategic plan to return S3 to profitability and diversify into
related high-growth areas. We are extremely pleased with the execution of our plan, which has included the successful
launch of our Savage4 and Savage MX graphics products resulting in design wins with volume OEMs including Compaq,
IBM, NEC/Packard Bell and Micron. We also are pleased with the company's financial improvements and expect these to
accelerate based on our volume shipments.''
''We are excited about the opportunity that we see in combining S3's highly tuned graphics engine and substantial
financial resources with our strong graphics brand and channels and our Internet appliance, Internet connectivity and
home networking growth businesses,'' said William J. Schroeder, president and CEO of Diamond Multimedia.
The company recently announced that it is scheduled to receive 252 million shares of United Microelectronic Corporation
(UMC) stock, which is valued today at approximately $600 million based on current NT value and UMC trading price.
This combined, with S3's current cash position of approximately $130 million, has the prospective combined company
positioned to aggressively invest in new product opportunities.
Target product market growth areas include Internet appliances, where Diamond Multimedia is an industry leader with its
well-known Rio MP3 music player, and home networking, where Diamond is a leader with its wireless and phoneline
HomeFree product line. In addition, S3 and Diamond Multimedia intend to continue to aggressively invest in Diamond's
DSL and cable modem programs.
Terms of the Agreement
Under the terms of the agreement, S3 will acquire Diamond Multimedia Systems in a purchase transaction in exchange
for S3 common stock. Diamond shareholders will receive 0.52 shares of S3 common stock for each share of Diamond
stock. S3 will assume Diamond's outstanding options. The deal is expected to close in October of 1999, subject to
various conditions including customary regulatory approvals and approval by the shareholders of both S3 and Diamond
Multimedia. The deal is expected to be tax-free. Diamond Multimedia has approximately 35.3 million shares outstanding.
About S3 Incorporated
One of the largest suppliers of graphics and video accelerators in the world, S3 Incorporated has established itself as a
market leader in technology excellence, core business strengths, strategic partnerships and worldwide reach. Building on
these strengths, S3 is committed to delivering targeted products for the Personal Computer, Computing Integration
and Consumer Appliance Markets. The S3 web site address is www.S3.com.
About Diamond Multimedia
Diamond Multimedia is a leader in PC multimedia and Internet connectivity, providing advanced products that enable
desktop computer users to create, access and experience compelling new media content from their PC's and through
the Internet. Products include the Rio series of Internet audio appliances, the Stealth and Viper series of video
accelerators, the Monster series of 3D gaming accelerators, the Fire series of professional graphics accelerators, the
Supra series of modems, and the HomeFree line of home networking products. Diamond's common stock is traded on
the NASDAQ under the symbol DIMD, and its web site address is www.diamondmm.com. The Company's Internet
music portal site is at www.RioPort.com.
Except for historical information contained herein, the matters set forth in this press release, including statements as to
S3's ability to emerge as a key player in the Internet appliance and home networking market, S3's ability to become a
total solutions provider, S3's ability to obtain liquidity for its UMC shares, and the acceleration of financial
improvements are forward-looking statements that are subject to risk and uncertainties, including the impact of
competitive products and pricing and of alternative technological advances, the ability of S3 and Diamond to
consummate their merger and to integrate their businesses in a timely and successful manner, the ability of the
company's foundries to manufacture Savage4 products in a timely manner, market acceptance of each company's and
their customers' new products, and other risks detailed from time to time in S3's and Diamond's SEC reports, including
S3's and Diamond's Quarterly Reports on Form 10-Q for the three months ended March 31, 1999. S3 is a registered
trademark of S3 Incorporated. The S3 corporate logo, Savage4 and Savage MX are trademarks of S3 Incorporated.
Other marks referenced herein are the property of their respective owners. |
