Santa Clara and
Sunnyvale, Calif. (May 5, 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, today 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.
Source: Oaktech.com
