DTS Inc. (DTSI) Tuesday said it has agreed to acquire SRS Labs Inc. (SRSL), in a cash-and-stock deal valued at about $148 million including acquired cash. The acquisition is expected to expand DTS portfolio of audio-related patents. Following the news, SRS shares surged over 37 percent on the Nasdaq.
DTS has agreed to pay $9.50 for every SRS share in cash and stock, representing a premium of 38 percent over SRS stock price as of April 16.
The cash and stock components will each equal 50 percent of the total purchase price to be paid. The DTS stock to be issued in the deal was valued at $30.52 per share, the closing price on April 12.
SRS shareholders may select either $9.50 per share in cash or a fixed ratio of 0.31127 shares of DTS stock for every share of SRS held, subject to proration and adjustment. DTS expects to finance the cash portion through a combination of existing cash and a new credit facility.
The combination is expected to accelerate DTS strategy to provide customers with a best-in-class, comprehensive integrated suite of audio solutions ranging from voice processing through audio rendering, and from low bit rate applications to high-quality lossless audio delivery. DTS sees the acquisition to be accretive on a GAAP basis by 2013.
The deal is expected to close in the third quarter this year. SRS Chief Executive Thomas Yuen is expected to join the DTS board following the acquisition.
Jon Kirchner, DTS' chairman and chief executive, said "SRS Labs and its strong portfolio of audio processing technologies are a natural strategic fit for DTS, with complementary technologies, robust anticipated customer synergies, and significant economies of scale."
Yuen and certain of his family members and affiliates, who together hold about 20 percent stake in SRS, has agreed to support the deal.
SRS is currently trading at $9.42, up $2.56 or 37.32, on a volume of 1.1 million shares, above the three-month average volume of 40 thousand.
DTSI is currently trading at $30.54, up $0.79 or 2.66%, on a volume of 0.1 million shares on the Nasdaq.
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