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 million.