Genesis Microchip to buy Sage

SAN JOSE, Calif. (Reuters) - Genesis Microchip Inc. (GNSS.O), a maker of semiconductors used in graphics and video applications, on Friday said it would buy Sage Inc. (SAGI.O) for about $241 million in stock to expand in the market for chips used in flat-panel displays.

Under the terms of the agreement, San Jose, California-based Genesis will issue 0.571 share for each outstanding share of Sage.

Based on Genesis's closing stock price Thursday of $27.30 on Nasdaq, the deal values Milpitas, California-based Sage at $15.59 a share, a premium of 37 percent over Sage's closing price of $11.36.

Following the acquisition, former Sage share and option holders will own about 28 percent of the combined company on a fully diluted basis, the companies said in a joint statement. Chandra Reddy, Sage's chief executive, will join Genesis's board as vice chairman.

The transaction should add to Genesis' earnings per share starting in the first full quarter of combined operations, excluding the effects of one-time charges, Genesis said.