VIA Technologies sells stake in S3 Graphics

TAIPEI, TAIWAN: VIA Technologies Inc, a leading innovator of power efficient x86 processor platforms, announced the signing of definitive agreement to sell all of its shareholding in S3 Graphics Co. Ltd to HTC Corp. S3 Graphics is a leading provider of innovative graphics visualization technologies used in PCs, game consoles and, more recently, mobile devices.

VIA acquired S3 Graphics in 2001 with the intention to accelerate integration of graphics capabilities with its processor and chipset products. S3 Graphics became undercapitalized in 2005, and VIA introduced WTI Investment International Ltd as a new investor to help fund the operations and R&D initiatives. WTI is a private investment company, in which Cher Wang, chairman, VIA, is a significant shareholder.

Under terms of the agreement with HTC, total consideration for all outstanding shares of S3 Graphics will be $300 million. Of which, VIA will receive $147 million; and WTI will receive $153 million. VIA will recognize a capital gain of $37 million and paid-in-capital of $115 million in this transaction.

“The transaction would allow VIA to monetize a portion of its rich IP portfolio, yet retain its graphics capabilities to support the development and sale of its processors and chipsets,” said Tzu-mu Lin, senior VP and board director of VIA. “We wish to thank WTI for its capital contribution to support S3 Graphics since 2005.”

The proposed transaction has received approvals from the boards of directors of VIA, WTI, and HTC. Subject to regulatory approvals and other customary conditions, the transaction is expected to close before end of 2011.