DTS and SRS Labs logos

You've probably heard of both DTS and SRS Labs or seen their logos, but you might not be able to explain exactly what these companies do. To put it simply: both enhance the sound from our electronics, and now, they'll be doing it together. In a cash-and-stock deal worth just under $10 a share DTS will acquire SRS Labs, giving the new company over a thousand audio related patents (what else?) and trademarks. The deal is valued at about $148 million and expected to be accretive to DTS by 2013. It's hard to predict what this might mean for us consumers, but we're sure both hope that when two great companies get together they find new ways to make better products. Of course,, that isn't always how these deals turn out.

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DTS TO ACQUIRE SRS LABS IN CASH-AND-STOCK TRANSACTION
Combination Accelerates Growth in Rapidly Growing Mobile and Other Network-Connected Markets
Brings Together Leaders in Codec Solutions and Audio Processing
Transaction Expected to be Accretive to DTS by 2013

CALABASAS, Calif. and SANTA ANA, Calif. (April 17, 2012) – DTS, Inc. (Nasdaq: DTSI), a leader in high-definition audio, and SRS Labs, Inc. (Nasdaq: SRSL), a leader in audio processing and enhancement technologies, today announced that they have entered into a definitive agreement under which DTS will acquire all outstanding shares of SRS Labs in a cash-and-stock transaction valued at $9.50 per share, or a total of approximately $148 million in aggregate equity value, including acquired net cash of approximately $38 million as of December 31, 2011. The consideration represents a premium of 38% per share over SRS Labs' stock price as of the close of trading on April 16, 2012. Under the terms of the agreement, the cash and stock components will each equal 50% of the aggregate consideration paid by DTS for SRS Labs' outstanding shares. The DTS common stock to be issued in the transaction was valued at $30.52 per share, the closing price per share of DTS common stock on April 12, 2012. All SRS Labs options and restricted stock units will fully vest immediately prior to and be canceled upon the closing of the transaction, and the holders thereof will be entitled to receive the $9.50 price per share (less the exercise price of any option) payable in cash.

The transaction combines two highly complementary product and technology portfolios, bringing together DTS' suite of audio solutions and SRS Labs' range of audio processing technologies. Through the transaction, DTS will expand its already sizeable portfolio of audio-related intellectual property, creating one of the broadest in the industry with over 1,000 registered and pending patents and trademarks. The combination accelerates DTS' strategy to provide customers with a best-in-class, comprehensive integrated suite of audio solutions ranging from voice processing through audio rendering, and from low bit rate applications to high-quality lossless audio delivery. The combination is anticipated to fast-track DTS' expansion in the rapidly growing markets for mobile and other network-connected devices, while significant operating, customer and licensing cost efficiencies are expected to be realized.

"This transaction represents an exciting extension of 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 Jon Kirchner, DTS' chairman and CEO. "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. This transaction will accelerate DTS' delivery of compelling end-to-end solutions to a broad base of customers, enable even higher levels of service, and provide the Company with a solid platform for continued growth."

"We are pleased to provide our shareholders an attractive premium," said Thomas C.K. Yuen, SRS Labs' chairman, CEO and president. "As consumers increasingly demand higher quality audio experiences everywhere from their mobile devices to their homes, this combination benefits our customers and employees by creating significant scale and penetrating 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."
DTS expects the transaction to be accretive on a GAAP basis by 2013, supported by at least $8 million in estimated annual combined cost synergies. Combine pro forma revenue for the Company for the fiscal year ended December 31, 2011 was $129.8 million.

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DTS and SRS Labs to combine into one big happy family