Imagination Technologies plc – Acquisition Announcement
Imagination to acquire Caustic Graphics, developer of real-time ray-tracing graphics technology, for $27 million
December 14, 2010 --
Imagination Technologies Group plc (LSE: IMG, “Imagination” or “the Group”), a leading multimedia, communications and embedded processor technology company, has signed a definitive agreement to acquire Caustic Graphics Inc. (‘Caustic’), a developer of innovative and state-of-the-art real-time interactive ray tracing graphics technology for a cash consideration of $27 million (c.£17.1 million).
Caustic and ray tracing
Ray tracing is a technique for rendering three-dimensional
graphics with complex and more natural lighting models to achieve
cinema quality 3D and a level of near photographic realism that is
impractical with traditional 3D graphics techniques.
To date ray tracing has been used in specialized applications
such as special effects and computer animated movies, industrial
design, mechanical and architectural modeling to create life-like
and photorealistic imagery.
Caustic has developed unique and patented hardware and software
technologies to radically lower the cost and dramatically increase
the efficiency and performance of ray tracing. This opens up the
potential of highly photorealistic computer generated animated
imagery to a host of new real-time applications and markets not
possible previously.
The ray tracing approach has the added benefit of substantially
simplifying the process and cost of content creation. Caustic
technology also allows the coexistence of traditional polygon based
rendered objects (e.g. objects created using OpenGL ES) and
life-like ray-traced elements in the same scene.
Strategic Rationale
- Imagination gains access to unique and patented technology
which enables real-time ray traced and cinema quality 3D
graphics to be implemented in a novel and highly cost-effective
manner
- This capability can be efficiently added to the Group’s
highly successful POWERVR Graphics Processing Units (GPUs)
- Caustic technology operates fully in conjunction with and
complements Imagination’s existing graphics processing IP
- Helps ensure Imagination stays at technological
forefront, driving major innovations in the growing 3D
graphics market
- Acquisition enables Imagination to bring further disruptive
technologies, as part of its roadmap, to its mainstream graphics
markets across mobile, embedded, console and computing segments
- Acquisition provides access to professional and specialised
markets that take advantage of Caustic’s much more efficient
photo-realistic and cinema quality graphics solution
- The combined technologies from Imagination and Caustic
will dramatically change the price-performance point of
these solutions and enable real-time operation
- Acquisition will enable Imagination to extend its ecosystem
to include very advanced graphics content and tool developers,
and ultimately bring such content and tools to mainstream
markets
Hossein Yassaie, Chief Executive Officer,
Imagination said:
“The most exciting consumer technologies have always started in
the professional industry until someone finds the right way to cost
engineer and optimise power consumption of those technologies.
“We have a proven track record of disrupting markets by bringing new
and high-end technologies to consumer and embedded products, such as
our POWERVR graphics IP cores.
“Ray tracing is a key additional technology that traditionally has
been regarded as the exclusive domain of specialised markets and non
real-time applications. We intend to change that.
“We are therefore delighted to have reached agreement to acquire
Caustic with its outstanding engineering team. The acquisition will
enable us to accelerate our plans to be the leading supplier of all
forms of graphics technologies in all markets and to continue our
mission of delivering the most advanced graphics technologies to
mainstream markets.”
Chip Stearns, Chief Executive Officer, Caustic
said:
“Our vision is to enable cinema quality computer graphics at new
cost and power consumption design points. We are excited at the
prospect of becoming part of the Imagination team as we bring ray
tracing to a much broader base, and utilize their extensive
resources and partnerships to bring our technology to every consumer
screen.”
The Group has today published its half-year results for the six
months to 31 October 2010 (see separate release).
Background to the acquisition
Caustic (www.caustic.com) has developed a unique method for
implementing ray tracing technology that allows real-time
interactive ray tracing with new levels of efficiency, performance
and cost. Ray tracing is a technique for rendering three-dimensional
graphics with complex lighting to achieve a level of near
photographic realism that is impractical with traditional rasterized
3D graphics techniques.
Because ray tracing requires both enormous computing power and
also management of a very complex database, it has mostly been a
tool for professional designers and animators using powerful and
expensive computing systems that could take many seconds or even
minutes or more often hours to create a single frame. As such it has
been unsuitable until now for interactive consumer applications.
Caustic’s unique patented hardware and software technology will
lower radically the cost and increase the efficiency and performance
of ray tracing.
Caustic is still in the early stages of commercialising its
technology. In the 12 months to 31 December 2009, Caustic generated
$140,000 (c. £89,000) in revenue and a loss before tax of $6.2
million (c. £3.9 million). As at 30 June 2010, Caustic had a
net debt position of $3.1 million (c.£2.0 million). Caustic had
gross assets of $1 million (c.£630,000) at 30 June 2010 (all dollar
amounts have been converted at an exchange rate of £1 to
$1.58).
Funding and financial effects of the acquisition
The total consideration is $27 million (c. £17.1 million) in cash.
The cash will be financed from Imagination’s existing resources.
After completion Caustic will have no financial liabilities.
Caustic expects to generate revenue both by the sale of PC cards
containing Caustic hardware technology from which it will derive
royalty per unit sold and software revenue through the sale of
initial and renewal licenses for OpenRL™ SDK (Open Ray Tracing
Library) and Brazil for Developers™ APIs to vendors of 3D graphics
platforms and applications.
Caustic expects royalty and software revenue to build in the
second half of Imagination’s financial year ending 30 April 2012.
In the medium term Caustic technology will be integrated in a
range of Imagination GPUs as part of the Group’s overall graphics
roadmap which will target many mainstream markets.
Subject to revenue performance and the timing of sales of the PC
card incorporating Caustic technology, Imagination currently expects
Caustic to make a positive contribution to earnings in the year
ending 30 April 2013.
Terms of the agreement
Imagination and Caustic have entered into a definitive acquisition
agreement under the terms of which Imagination intends to acquire
Caustic for $27 million in cash. The agreement is subject to various
conditions which are set out in the acquisition agreement and which
Imagination expects to be satisfied before the end of the calendar
year. Following completion Caustic will be debt free.
Imagination
Imagination – a global leader in multimedia and communication
technologies – creates and licenses market-leading processor cores
for graphics, video, multi-threaded embedded processing/DSP and
multi-standard communications applications. These silicon
intellectual property solutions for systems-on-chip (SoC) are
complemented by platform level IP and services, a strong array of
software tools and drivers and extensive developer and middleware
ecosystems.
Target markets include mobile phone, handheld multimedia, home
consumer entertainment, mobile and low-power computing, and in-car
electronics. Its licensees include many of the leading semiconductor
and consumer electronics companies. Imagination has its corporate
headquarters in the United Kingdom, with sales and R&D offices
worldwide.
Enquiries
Imagination Technologies Group PLC
Tel: 01923 260511
Hossein Yassaie, CEO
Trevor Selby, CFO
College Hill Associates
Tel: 020 7457 2020
Adrian Duffield/Carl Franklin
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