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Graphics card pioneer goes for a song

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ELSA, a PC peripherals developer, has bought Hercules, the one-time pacesetter in the graphics card market, for $8.5 million in cash. The deal includes the transfer of all assets, including brand rights, and some of Hercules' liabilities to ELSA. Hercules generated revenue of $30 million in 1997. Hercules was one of the first players in the graphics card market, and set the industry standard in the early eighties. Bob Raikes, MD of Meko, the publisher of Display Monitor, commented: "It was The Original. It was making graphics cards back when no-one apart from IBM had even thought of them. It struggled for a while, but it has been making a comeback over the last couple of years. Hercules has built up a strong European presence, particularly in Germany." ELSA expects that the increase in development capacity will enable it to market innovative products even faster. The companies will now work from the same HQ in the US, in an effort to cut costs in the short term. The acquisition gives ELSA a foothold in Europe and access to a consumer market, covered by Hercules, but until now largely untapped by ELSA. According to Theo Beisch, CEO of ELSA, Hercules provides significant development know-how, excellent contacts to the internationally established chip manufacturers and outstanding sales channels in the US and Europe. He said the takeover was the start of an aggressive programme of expansion. "ELSA's first acquisition is a major strategic step on our way to become a global player. The financial strength of ELSA combined with Hercules' worldwide image in the consumer market allows us to play a dominant role in the PC graphic cards sector even faster than expected."®

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