NEW YORK (CNNfn) - Graphics software maker 3Dfx Interactive is expanding beyond its role as a graphic chip maker, announcing Monday it would buy computer graphic card manufacturer STB Systems in a stock deal valued at $141 million.
STB shareholders will receive 0.65 share of 3Dfx common stock for each share of STB common. The deal is expected to close in March, subject to approval by federal regulators and shareholders.
"Now we will be in charge of our own destiny," said Greg Ballard, president and chief executive officer of 3Dfx.
Once the deal is complete, 3Dfx (TDFX) will enter a new arena in the computer industry: the retail market. While its chips have been sold extensively to home PC users, those chips have always been attached to video boards from other manufacturers, such as Diamond Multimedia (DIMD) and Creative Labs (CREAF). Now, the company will compete against its former partners.
To gain an edge in that battle, Ballard says 3Dfx will not release the Voodoo3 technology to other video card makers. Rather, the much-anticipated accelerator will only be available on 3Dfx brand cards.
Ballard says the talks with STB were originally strategic, with 3Dfx hoping to launch an original product through STB's infrastructure. Over the past few weeks, though, the discussions evolved into a takeover.
Once the acquisition is complete, STB's operations will remain based in Richardson, Texas, with the combined companies' headquarters at 3Dfx's office in San Jose.
3Dfx said William Ogle, president and chief executive of STB, would join its board. Campbell will remain chairman of 3Dfx.
3Dfx shares were up 2-11/16 to 13-11/16 in mid-day trading.
-- by staff writer Chris Morris