Via and S3 talk $377m deal down to $288m
New 3D chip business sale designed to win backing of Taiwanese gov't
Via and S3 have agreed new terms for the sale of the latter's graphics chip biz in a bid to win the backing of the Taiwanese government.
Taiwan's business regulators balked at the scale of the Via-S3 cash and shares deal, which was valued at $377 million and was due to have been completed at the end of June. The regulators considered the deal unwise since it would result in too much cash and stock from a Taiwanese operation (Via) moving to a foreign company (S3). Consequently, they refused to permit the deal to go ahead unless it was amended.
Since then Via has been in talks with the Taiwanese government to come up with a plan that will allow the sale to go ahead and still be acceptable to S3. The newly agreed terms will give S3 $208 million in cash plus $60 million in assumed liabilities.
Via, meanwhile, will have the right swap the 13 million S3 shares it already owns for the above cash payment and will be able to buy up to two million S3 shares for $20 million, if it so chooses.
The previous deal would have seen Via buy three million S3 shares and pay S3 $323 million in cash and stock.
Built into the calculation of how much each company gets is the $45 million S3 will save in tax liabilities.
Both companies hope the Taiwanese government will now smile on the deal and, like the US regulators before it, allow the sale to go ahead. If so, the takeover will be completed by the end of January 2001 - some six months behind schedule. ®