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DTS To Buy SRS Labs

Calabasas, Calif. – DTS has
entered into an agreement to buy SRS Labs for about $148 million.

Both publicly traded companies
supply audio technologies used in a host of consumer electronics products, from
Blu-ray players to TVs and A/V receivers.

The transaction will combine “two
highly complementary product and technology portfolios,” enable DTS to expand
its intellectual property portfolio to more than 1,000 registered and pending
patents and trademarks, and accelerate DTS’s expansion into mobile and other
network-connected devices, DTS said.

The merger will also yield at
least $8 million in estimated annual cost synergies.

The transaction extends “our
strategic focus on the compelling long-term opportunities being driven by Cloud-based
entertainment delivery and the proliferation of connected devices, enabling DTS
to accelerate our expansion in the key growth areas of mobile and other
network-connected device markets, as well as to drive innovation and create
significant near- and long-term value for our shareholders,” said DTS
chairman/CEO Jon Kirchner. “SRS Labs and its strong portfolio of audio-processing
technologies are a natural strategic fit for DTS, with complementary
technologies, robust anticipated customer synergies and significant economies
of scale.”

For his part, SRS chairman, CEO
and president Thomas C.K. Yuen said the merger would create “significant scale”
and enable the companies to penetrate new markets. “We look forward to making
the collective resources of a larger company available to our customers around
the world, who will also benefit from superior customer service,” he added.

SRS Labs put itself up for sale
and considered competing offers before accepting the DTS bid, SRS said. The
transaction has been unanimously approved by both companies’ board of directors
but must still be approved by U.S. regulators and SRS shareholders.

SRS’s Yuen, family members and
affiliates hold approximately 20 percent of outstanding SRS shares and have
committed to vote all of their shares in favor of the transaction, which is
expected to close in the third quarter, DTS said.

Upon closing, Yuen is expected to
join the DTS board of directors.

Combined pro forma revenue for
the merged companies for the fiscal year ending Dec. 31, 2011, was $129.8