, Inc., a leading provider of system-on-chip ICs for the advanced display industry, announced that it has signed a definitive agreement to acquire Equator Technologies
, Inc., a privately held fabless semiconductor company. Founded in 1996 and based in Campbell, Calif., Equator is a leading provider of programmable digital video and audio encoding and decoding solutions with its family of Broadband Signal Processor, or BSP(TM), ICs.
Equator Technologies is at the forefront of delivering programmable advanced video compression technology with customer-proven system-on-chip IC and software solutions that are key to unlocking broadband networks for video entertainment and communications. Equator's programmable architecture leads the industry in supporting multiple digital video formats and offers maximum flexibility and upgradeability as video standards continue to evolve with advanced compression technology or digital rights management schemes. Currently, Equator's programmable system-on-chip (SOC) solution supports a number of encode/decode, or codec, technologies including:
- Microsoft Windows Media 9 Series including SMPTE VC-1 encode and decode;
- MPEG-2 encode and decode;
- MPEG-4 encode and decode;
- H.264, also known as MPEG-4 AVC, encode and decode;
- Real Media Player decode;
- H.263 and H.323 video conferencing encode and decode;
- DivX encode and decode; and
- ON2 encode and decode.
In addition, Equator has shipped the digital rights management, or DRM, solutions for Microsoft Windows Media DRM 10 and SecureMedia Encryponite DRM.
Equator is an emerging supplier to manufacturers of Internet Protocol television, or IPTV, set-top boxes that decode streaming digital video into standard video formats. Over the past nine years, Equator has pioneered programmable digital video encoding and decoding solutions for demanding applications to numerous manufacturers of video conferencing and security surveillance systems. The company also supplies programmable digital video encoding solutions to the Digital Video Broadcast Services market serving the satellite, cable and terrestrial broadcast industries.
With the addition of Equator's customer-proven solutions, Pixelworks will be able to cross the connection from the TV to the IPTV set-top box which will open up new market opportunities and customer relationships. This acquisition will provide programmable technologies to Pixelworks' customers in order to create a new generation of digital televisions, including those that might integrate Internet Protocol television, or IPTV, decoding technology to allow viewing of digital video directly over the Internet.
Internet Protocol television (IPTV) allows consumers to view full-motion video or television content, including high-definition, over a network or broadband Internet connection. The market for IPTV set-top boxes, according to industry analysts, is expected to exceed 4 million units in 2005 and will approach 15 million units by 2008.
"The acquisition of Equator will represent an aggressive expansion of Pixelworks into the emerging IPTV market and provides new capabilities for our customers and opportunities for us," said Allen Alley, President, CEO and Chairman of Pixelworks. "We want to enable our customers to deliver solutions that leverage the advantages of digital displays, digital networks, and digital content to deliver a better user experience where consumers can easily find exactly the information or entertainment content they want, when they want it and where they want to watch it."
Under terms of the agreement approved by the respective Boards of Directors, Pixelworks will purchase all outstanding shares of Equator for approximately $109 million in cash. Additionally, all outstanding options to purchase Equator stock will be assumed by Pixelworks. The transaction is expected to close in the second quarter and is subject to regulatory approval and customary closing conditions.
Pixelworks currently expects Equator to be accretive to pro forma earnings per share, which excludes non-cash acquisition related expenses, in the first quarter of 2006.