Creative launches graphics move with 3DLabs takeover

Creative Technology reveals plans to re-enter the graphics market with a £73m offer for 3DLabs
Written by Graeme Wearden, Contributor

Computer peripherals manufacturer Creative Technology announced on Sunday that it has reached an agreement to buy graphics company 3DLabs for almost £73m in shares and cash.

3DLabs specialises in creating high-end graphics chips and software for professional PC users involved in CAD (computer aided design), and video content creation. Creative, which had previously indicated that it planned to concentrate on home digital entertainment products, claimed that the purchase of 3DLabs would enable it to create graphics cards that would appeal to the consumer PC market, and video gamers in particular.

Sim Wong Hoo, chief executive of Creative Labs, identified 3DLabs' TeroOps graphics chip, which can carry out one trillion operations per second, as the key reason for deciding to buy the company. "As we have analysed 3Dlabs' product lines, and most importantly their technology roadmap, we believe that their development of a scalable architecture and general purpose programmability will provide a significant competitive advantage in the graphics space," said Sim in a statement.

"As power gamers' insatiable demand for higher performance graphics capabilities grows, we see great opportunities to expand 3Dlabs' leadership in the ultra high-end professional markets into our higher volume PC consumer desktop markets," he added.

In addition to its range of Sound Blaster sound cards, Creative is well known for its Jukebox range of MP3 players. The company launched its first Jukebox, whose 6GB hard drive could hold around 100 hours of MP3 files, in 2000 and followed up with a 20GB model last year.

Singapore-based Creative already owns around 28 percent of 3DLabs, in a mixture of shares, warrants and convertible notes. It is now offering 3DLabs' other shareholders around £48.5m worth of Creative shares and £24.3m in cash. The deal is subject to approval by 3DLabs' shareholders.

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