SRS Labs (Nasdaq: SRSL) rockets 35% on takeover deal

Northern, WI 4/17/12 (StreetBeat) -- In a deal which unites to companies in the high-end audio technology market, DTS Inc. (Nasdaq: DTSI) this morning said it has agreed to buy SRS Labs (Nasdaq: SRSL) for $9.50 a share in cash and stock. The deal is worth $148 million. SRS shares closed Monday at $6.86, giving the deal a 38% premium.

The purchase price will paid half in cash and half in DTS shares. The stock issued in the offering was valued at $30.52 a share, the closing price of DTS shares on April 12. All SRS Labs options and restricted stock units will fully vest immediately prior to the deal and be exchanged for $9.50 a share in cash.

SRS Labs holders may choose either $9.50 in cash or a fixed ratio of 0.31127 shares of DTS common stock for every share of SRS Labs common stock they own, subject to proration and adjustment. DTS expects to finance the cash portion of acquisition through a combination of existing cash balances and a new credit facility. The transaction is not subject to any financing conditions.

DTS notes that the deal “combines two highly complementary product and technology portfolios, bringing together DTS’ suite of audio solutions and SRS Labs’ range of audio processing technologies.” The combined company will have over 1,000 registered and pending patents and trademarks.

DTS said the deal should be accretive on a GAAP basis by 2013, with at least $8 million in estimated annual cost synergies. On a pro forma basis, the company company had 2011 revenue of $129.8 million.

SRS said the deal follows a “comprehensive process” of considering competing offers.
The deal is expected to close in Q3.

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