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July 7, 2003 (9:10a)- Preliminary Proxy
Statement Filed
Shareholder Meeting Details
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GNSS
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PXLW
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| SH Date |
TBA |
TBA |
| Record Date |
May 21,
2003 |
May 21,
2003 |
| Proxy Mailed |
TBA |
TBA |
Termination Date
September 17, 2003 / November 17, 2003
Regulatory Matters
HSR
On June 23, 2003, the Federal Trade Commission requested additional information
and documentary material in connection with its review of the proposed merger.
The Federal Trade Commission request will result in an extension of the waiting
period under the Hart-Scott-Rodino Act. Pixelworks and Genesis Microchip plan
to respond as promptly as possible to the Federal Trade Commission request.
Other
In addition, we may be required to make certain filings or seek certain
approvals from other foreign jurisdictions to be determined. The Federal Trade
Commission and the Department of Justice frequently scrutinize the legality of
transactions such as the merger under the antitrust laws. At any time before or
after the completion of the merger, the Federal Trade Commission or the
Department of Justice could take a variety of actions under the antitrust laws,
including seeking to prevent the merger or seeking the divestiture of
substantial assets of Pixelworks or Genesis Microchip. In addition, certain
private parties as well as state attorneys general and other antitrust
authorities may challenge the merger under United States or foreign antitrust
laws. We intend to make any applicable foreign such filings if we determine
that they are required.
June 24, 2003 (8:55a)- HSR Second Request
Issued
The companies have announced that the FTC has
issued a second request under HSR. A joint company press release states the
following:
"The FTC request will result in an
extension of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976. Genesis Microchip and Pixelworks plan to respond as
promptly as possible to the FTC request."
Previous analysis of this combination is available in
this March 19 postingand this update posting. The transaction remains expected
to obtain FTC approval, without much difficulty, in the next six to eight
weeks.
June 16, 2003 (9:00a)- Preliminary Proxy
Statement Filed
Shareholder Meeting Details
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GNSS
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PXLW
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| SH Date |
TBA |
TBA |
| Record Date |
May 21,
2003 |
May 21,
2003 |
| Proxy Mailed |
TBA |
TBA |
Termination Date
September 17, 2003 / November 17, 2003
Regulatory Matters
HSR
Under the Hart-Scott-Rodino Act, as amended, the merger may not be consummated
unless certain filings are submitted to the Federal Trade Commission and the
Department of Justice and certain waiting period requirements are satisfied. We
filed the notification and report forms required under the Hart-Scott-Rodino
Act with the Federal Trade Commission and the Department of Justice on (TBA)
2003. In addition, we may be required to make certain filings or seek certain
approvals from other foreign jurisdictions to be determined. The Federal Trade
Commission and the Department of Justice frequently scrutinize the legality of
transactions such as the merger under the antitrust laws.
Other
We intend to make any applicable foreign such filings if we determine that they
are required.
May 19, 2003 (12:30p) - Status Report
Comments were received from the SEC early last
week, and GNSS characterizes the questions as "fairly in-depth, but not
onerous." The companies hope to address the comments and re-file the proxy
statement before the end of May, but there is clearly a chance this may not
occur. Furthermore, based on the nature of the comments, GNSS believes at least
one more comment/response cycle will be necessary in order to obtain SEC
approval. Therefore, the shareholder meeting are not likely to be scheduled
until mid/late-July, 2003, at the earliest.
Unfortunately, the companies continue to refuse to provide
HSR details at this point. Presumably, the HSR filing date will be dropped into
the next revised proxy.
April 20, 2003 (8:35a)- Preliminary Proxy
Statment Filed
Shareholder Meeting Details
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GNSS
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PXLW
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| SH Date |
TBA |
TBA |
| Record Date |
TBA |
TBA |
| Proxy Mailed |
TBA |
TBA |
Termination Date
September 17, 2003 / November 17, 2003
Regulatory Matters
HSR
We filed the notification and report forms required under the Hart-Scott Rodino
Act with the Federal Trade Commission and the Department of Justice on ·
(TBA), 2003. In addition, we may be required to make certain filings or seek
certain approvals from other foreign jurisdictions to be determined. The
Federal Trade Commission and the Department of Justice frequently scrutinize
the legality of transactions such as the merger under the antitrust laws. At
any time before or after the completion of the merger, the Federal Trade
Commission or the Department of Justice could take a variety of actions under
the antitrust laws, including seeking to prevent the merger or seeking the
divestiture of substantial assets of Pixelworks or Genesis Microchip.
Other
In addition, certain private parties as well as state attorneys general and
other antitrust authorities may challenge the merger under United States or
foreign antitrust laws. We intend to make any applicable foreign such filings
if we determine that they are required.
April 7, 2003 (2:30p) - Status Report
Unfortunately, the companies have decided to
withhold all details regarding the various regulatory matters in this
transaction. The only guidance PXLW will provide at this time is that the HSR
notification has not been submitted as of yet, and will be filed at
approximately the same time as the initial proxy statement. A projection for
the first proxy filing is not being provided by either company.
As the deal was announced on March 17, it is reasonably safe
to assume that the proxy statement is nearing completion, and should be filed
within the next two weeks.
March 19, 2003 (9:15a) - Additional Research
Analysis
Subsequent research into this transaction has
yielded a much more optimistic outlook than the original assessment. While the relative complexity of
the products involved and the high market shares continue to raise the
possibility of some FTC interest, it now appears the IC market for Liquid
Crystal Display / Flat Panel Display products is much more diverse and
competitive than originally believed.
First, a conversation with one industry expert raised the
"Beer vs. Champagne" analogy for this transaction. In short, the
display industry in general considers PXLW's products as geared towards
high-end or 'champagne' display screens, such as new-generation televisions
(Plasma/HDTV), hand-held computers, cell phones, projectors, etc. GNSS' IC's,
on the other hand, are used primarily in less advanced 'beer' products such as
flat panel monitors and flat panel digital televisions. In other words, the
general use for the companies IC's is the same, but the types of products in
which the IC function are as different as...beer and champagne.
Second, it is abundantly clear that other players in the
broad FPD industry, such as Philips, STM, Macronix, and others (including
in-house manufacturers such as Sony), have the capability to maintain
sufficient competition in both the high-end and low-end markets regardless of
this combination. Most market share data that is publicly available at this
time is essentially obsolete as the industry has evolved rapidly over the last
two years due to increased demand for high-end FPD products. The companies
have, by all accounts, seen their market shares decline rapidly because of this
trend, and the corresponding introduction of improved IC products offered by
the above-mentioned competitors, as well as a significant number of Asian
competitors.
Third, there has been virtually no indication from the
numerous trade publications that this combination presents any competitive
problems. The semiconductor industry in one of the most highly covered and
analyzed segments out there, and not one article has yet to mention this deal
as anything other than an expected development. In fact, several publications
are quick to point out that this combination is actually illogical due to the
different end uses of the companies' respective products. If there were
antitrust problems here, it's inconceivable that every such publication would
fail to raise the point.
In sum, there is far more evidence suggesting this deal will
not draw FTC interest at this time. The current FTC has shown some
slowness in understanding complex technologies and quickly evolving markets, so
the possibility of a second request must be acknowledged. However, if HSR
consent is not granted in 30 days or less, a notification re-filing seems much
more likely than a full second request, at this time. The chances of a second
request are therefore now perceived at less than 10% -- perhaps closer to 5%,
and the chances of an HSR re-filing are perceived at only slightly
higher.
March 18, 2003 (8:20a) - "Genesis
Microchip to Buy Pixelworks"
Abstracted from a
San Jose Mercury News
article:
"As flat-panel display prices come down,
mounting competition from Taiwanese companies threatens to erode Genesis
Microchip's profits and market share -- and that competition casts a cloud over
the new company.
"Genesis investors oppose the agreement because many
bought the stock expecting it to rise past $20 and don't believe the deal will
boost sales, said CE Unterberg Towbin analyst Kalpesh Kapadia. Genesis chose to
be bought because it fears losing sales to rivals including STMicroelectronics,
he said.
"The Pixelworks purchase suggests Genesis will stick to
its business of making the standard semiconductors that power flat-panel
computer displays, rather than focusing more on other promising technology in
its portfolio. Those flat-panel chips account for at least 80 percent of
Genesis sales, and the company has roughly 65 percent market share in that
business said Steve Allen, analyst with Sterling Financial Investment Group.
"'It's a cutthroat business, and most of the cutthroat
companies are based in Taiwan,' Allen said. He said that right now, Genesis can
cut costs faster than chip prices drop, maintaining profits -- but by the end
of 2003, profits will shrink. 'If you ask me what they should have done, is
drop the LCD monitor business and focus on consumer television.'
"Specifically, Allen said, Genesis has a unit called
Faroudja Laboratories that has a lot of promise. Faroudja has a patented analog
technology that allows television images to appear more clearly that could
satisfy consumer demand for sharper TV ahead of high-definition channels. 'They
don't need Pixelworks for that,' he said."
March 17, 2003 (1:10p) - Misc. Article
Excerpts
2001
eSignal article:
"The combined Genesis-Sage could enjoy 65
percent or greater market share in flat-panel chips, according to a CIBC World
Markets report. National Semiconductor (NSM) also makes circuits for flat
panels. Pixelworks' piece of the market for flat-panel chips is very small, the
fund manager concedes. Romero, using Multex.com earnings estimates, has Genesis
shares selling for a 2002 price-earnings multiple of 65 or so, with 100 percent
revenue growth in the next year, thanks to the Sage purchase. No bargain there,
though. The shares have risen more than 150 percent from their October
lows.
"Tiny Pixelworks, meanwhile, should increase sales by
40 percent next year, Romero says. Pixelworks' market capitalization of $700
million is half that of Genesis. 'It really does appear cheap,' says Romero,
who owns the shares. 'Pixelworks also has stronger gross margins (a five-year
average 65 percent versus 55 percent at Genesis) and trades at almost half the
price-sales ratio of Genesis,' Romero said Monday morning. 'Regardless of whom
you own, the market is expected to continue its torrid growth well into the
next couple of years. The only wild card is the growth rate for these
companies.'"
2000 SiliconIndia article
"After demonstrating its proof of concept,
Sage launched a project to manufacture an IC-based controller for FPDs. But
there was a hitch: the factory that Sage was using to manufacture ICs developed
technical snags, as a result of which Sage lost six months. To recover the lost
time, the company began work on its second-generation IC-based product, the
Cheetah II. In the meanwhile, the production had to be migrated elsewhere, and
by the time the first generation product was out in the market, competitor
PixelWorks had introduced a slightly superior product. Though Sage had
successfully manufactured and introduced a product, it was not yet a market
winner. To gain its market position, the company looked to feedback from its
customers, who were mostly Japanese companies, trendsetters of the FPD market.
Their views and requests were incorporated in the design of the Cheetah II,
that was introduced in June 1998 and grabbed a 20 percent market share for
Sage.
"The success of Cheetah II has established Sage in the
second position in the market. The company aims to be a top player by the end
of this year by continuing to simplify monitor circuit design an area in which
it has already pioneered several features and innovations. Its goal is to
design products that would result in an ideal monitor - one without switches
and buttons, with true plug-and-play features.
" Sage currently focuses on FPDs that use liquid
crystal display (LCD), though its technology can drive any type of FPD. Several
new technologies for FPDs are coming up that may result in cheaper and larger
screens not just for computer monitors but for large TVs used in home theater
systems as well. FPDs are also ideal for high definition televisions (HDTV).
Sage is watching these emerging trends and is developing chips to address these
markets. 'The way we see it, flat panels are the future displays. Five years
from now these will be the predominant displays,' says Reddy. Until then, PCs
will have to be sold separately."
March 17, 2003 (11:30a) - Initial Research
Analysis
This transaction looks like a very strong
candidate to end the long semiconductor streak of quick HSR clearances. Every
indication to this point suggests the combined markets shares, in at least one
very complex technology segment, are sufficient to anticipate a second request.
Furthermore, most industry reports (prior to today's announcement) very clearly
show one of the companies as a dominant player, and the other a competitor, in
niche segments. One example is this
April 2002 Stanford Resources article which notes the
following:
"Such companies as Genesis Microchip, Sage
(now a part of Genesis), Macronix, and Trumpion (the last two are from Taiwan)
have historically held the largest shares of this market. Genesis has dominated
the business with an approximate 60% share, and its share has risen to 70%
following its acquisition of Sage. Profit margins have been extraordinarily
high for the leaders. For example, Genesis reported $12 million in profit on
$49.8 million in revenue for the three months ended Dec. 31, 2001.
"It appears that the brisk growth rates and high
profiles of the LCD monitor market have attracted many competitors in display
electronics in a short duration. The list now includes (in addition to the
companies listed above): Pixelworks, Philips,
STMicroelectronics, Media Reality Technologies, Topro Technology, Myson-Century
Technology, ED Tech, Integrated Technology Express, and Weltrend Semiconductor.
Not surprisingly, prices are responding to this competition.
GNSS' current 'dominant' position in certain niches combined
with PXLW's modest position should be enough to generate a second request --
especially when considering the technologies involved and the FTC's still light
case load.
On the positive side, there does appear to be (as noted
above) a number of new entrants into the field, some of which -- specifically
Philips and STM -- obviously have the ability to gain more market share if
motivated.
As additional research is conducted, the initial projections
is for a second request, or at least and HSR re-filing), followed by a
relatively brief second request review period of approximately two to three
months. It is unclear at this stage is divestitures will be necessary, but at
first glance this does not seem highly likely.
March 17, 2003 (10:40a) - Press Release
Highlights
"Genesis Microchip Inc. (Nasdaq: GNSS) and
Pixelworks, Inc. (Nasdaq: PXLW), announced today the execution of a definitive
merger agreement. The new company, to be called Genesis Pixelworks, is
positioned to become a leading provider of system-on-a-chip ICs for the rapidly
growing display and consumer electronics industries. The companies are
combining their respective technical and financial resources to accelerate the
development of new, innovative technologies and products that customers require
in these dynamic industries. Upon the closing and successful integration of the
transaction, Genesis Microchip and Pixelworks believe that the combined company
will be able to offer a broad line of the industry’s best display
controller solutions to the manufacturers of LCD monitors, televisions, and
multimedia projectors.
"Subject to shareholder approvals and other customary
closing conditions, the transaction is expected to close in the third quarter
of calendar 2003.
"Genesis Microchip Inc. (Nasdaq: GNSS) is a leading
provider of image processing systems enabling superior picture quality for a
variety of consumer and PC-display products. Featuring Genesis Display
Perfection(TM) technologies and Emmy-award winning Faroudja® video
technology, Genesis system-on-a-chip solutions are used worldwide by display
manufacturers to produce visibly better images across a broad set of devices
including flat-panel displays, digital TVs, digital CRTs, projectors and DVD
players. The Genesis technology portfolio features 135 patents, including
analog and mixed signal system-on-a-chip design, DCDi(TM) by Faroudja
deinterlacing, TrueLife(TM) video enhancement and IntelliComb(TM) video
decoding.
"Pixelworks, headquartered in Tualatin, Oregon, is a
leading provider of system-on-a-chip ICs for the advanced display market.
Pixelworks' solutions process and optimize video, computer graphics and Web
information for display on a wide variety of devices used in business and
consumer markets, including flat-panel monitors, digital televisions and
multimedia projectors."
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