InterVideo Inc. Announces Intention to Purchase uLead

[BJ_M]

InterVideo, Inc. (Nasdaq:IVII - News), a leading provider of DVD software, announced today that subsequent to a previous purchase of 18.5 percent, it has extended a tender offer to purchase an additional 65 percent of the issued shares of Ulead Systems, Inc.("Ulead") (TSE: 2487.TW - News), a leading developer of innovative video, imaging and DVD authoring software. The all-cash tender offer will be made at 30 NT (US$0.98) per share of Ulead common stock. Assuming the successful completion of the tender offer, the transaction will be valued at between apx. US$49 million. The deal is expected to be accretive to InterVideo's 2005 earnings based on InterVideo's current understanding of Ulead's business.

Upon completion of the tender offer, InterVideo will own apx. 85 percent of the issued shares of Ulead. These figures include the 18.5 percent of Ulead's issued shares currently owned by InterVideo, the shares to be purchased in the tender offer and an additional 1.5% of Ulead's shares to be purchased outside of the tender offer. InterVideo has entered into stock tender agreements with several Ulead shareholders pursuant to which the shareholders have agreed to sell a minimum of 22.5 percent of Ulead's issued shares in the tender offer. The tender offer is scheduled to expire on April 13, 2005.

InterVideo believes that its investment in Ulead will strengthen InterVideo's technology offering and allow the company to provide a more comprehensive digital media solution to both retail and OEM customers. Ulead's strengths in professional DVD authoring, video editing and still image processing complement InterVideo's tools and provide enhanced opportunities for addressing emerging and rapidly growing markets including multimedia home networking, high definition and Blu-ray DVD and multimedia mobile phones. Upon completion of the tender offer, InterVideo and Ulead plan to commence the integration of products and technologies of the two companies.

[BJ_M]

Ulead Systems, Inc. was founded in 1989 as a developer of video, imaging and DVD authoring software for desktop, server, mobile and Internet platforms. Headquartered in Taipei, Taiwan, Ulead has over 500 employees and maintains branch offices in the US, China, Japan and Germany. In March 1999, Ulead became the first publicly traded software company in Taiwan. According to company issued press releases, Ulead's revenues for 2004 were 1,350,009,000 NT (US$44 million) and as of September 30, 2004 the company had 818,945,000 NT (US$26.7 million) in cash and short-term investments, 2,044,435,000 NT (US$66.6 million) in total assets and no debt on its balance sheet.

I think this is a really good deal for Intervideo ...

They got a strong, well managed company for only $43million (really only $23million) and makes the avid deal even more bizzare in price paid ..

ulead and pinnacle are about the same size in terms of sales and employees -- but ulead doesnt have the higher end broadcast products or high end software and diversification pinnacle does

[sanjayk]

This will indeed be a good deal for InterVideo. IMO InterVideo products have always been of better in terms of quality and stability than Ulead products. WinDVD player has been a well established DVD software for a very long time.

Nevertheless it will further broaden the reach for InterVideo.

[proxyx99]

lLooks like the news about Pinnacle were leaking for quite some time. BJ_M don't know were did you get the info on revenues from but Pinnacle sold in 2004 about 320 mln USD, that is 7 times Ulead volume. This move is about consolidation and extending brainpower. Ulead was the next in line of takeovers. Both companies target same type of customer so there will be no immediate benefits for any.

[BJ_M]

lLooks like the news about Pinnacle were leaking for quite some time. BJ_M don't know were did you get the info on revenues from but Pinnacle sold in 2004 about 320 mln USD, that is 7 times Ulead volume. This move is about consolidation and extending brainpower. Ulead was the next in line of takeovers. Both companies target same type of customer so there will be no immediate benefits for any.

I was referring to the software sales consumer side of Pinnacle, which was slightly less than ulead ..

even taking into account the broadcast side - and looking at the P&E ratio, intervideo got a better deal than avid.. Pinnacle sold off steinburg already - so avid didnt get that technology. avid clearly has some long range plans and took this into account.


Pinnacle purple etc systems - not strong sellers by any measure ...

And they dropped some of thier other older systems (REEL and other hardware based systems) like a hot potato leaving owners really peaved.

[proxyx99]

This is not the first and last company to do that.

As to Ulead, well managed company and in black. But a small player. They bought Ulead as this is the last of better known names that was for sale.
Number of players is reduced by a factor of 2 (all mergers/aquisitions). That was a trend set by Sonic and noone in the business can ignore that if they want to be a player. You say better deal on Ulead? I don't think so. If you are right then we would have to assume that Avid is run by amateurs. I don't think that you would accept that point of view. Let's wait until it's done and check Wall Street Journal.

[BJ_M]

So you are saying then companies like AOL, GM, FORD, BMW, Westinghouse, DOW, Microsoft and many others are all run by amateurs?


Since all of the above have purchased companies for to high a value, by their own admission down the road.

The examples are many .. I suggest you take economics 101 ..

[proxyx99]

I refuse to follow your convoluted logic (or is it?).