August 21, 1998 - ELSA AG, Aachen, one of the world’s leading developers and marketers of PC peripheral products for Computer Graphics and Data Communications, announced today that it has agreed to fully take over Hercules Inc., Fremont, California, the pioneer of the PC graphics card industry. The agreement covers the acquisition of all assets including all brand rights of Hercules Computer Technology, Inc. The purchase price amounts to US$ 8.5 million and the assumption of certain Hercules liabilities, and will be paid in cash.
- Further increase of market share
- Additional consumer brand and new worldwide sales channels
- Engineering capacity in the US
- Synergies and cost reductions
Like ELSA, the strengths of Hercules, the US pioneer in PC graphics cards, are in the field of product development. The experienced Hercules management will continue its work within the ELSA group. The Silicon Valley-based company exclusively manufactures graphics cards for consumers, thereby covering a market segment which has, until now, hardly been tapped by ELSA on a worldwide basis. Besides a well-established brand, Hercules has excellent sales channels in non-German-speaking European countries as well as in the United States. With 50 employees, Hercules achieved revenues of approximately US$ 30 million in 1997.
According to Theo Beisch, CEO of ELSA, Hercules provides significant development know-how, excellent contacts to the internationally established chip manufacturers and outstanding sales channels in the US and Europe. ELSA expects that the increase in development capacity will enable it to market innovative products even faster. To optimize cost structures in the short term already, it is planned to merge the location of both companies in the US.
As Peggy Fong, CEO of Hercules, states: "Hercules is known worldwide as inventor of the PC graphics card. Our international sales channels complement ELSA's strong market position in the German-speaking countries. Our innovative consumer products address those price segments which ELSA until now hardly covered and thus provide synergies. Hercules technological strength benefits from the closeness to Silicon Valley and the chip manufacturers located there. This guarantees 'time to market' - the most important key to success within our industry."
Theo Beisch about the acquisition: "ELSA's first acquisition is a major strategic step on our way to become a global player. The financial strength of ELSA combined with Hercules' worldwide image in the consumer market allows us to play a dominant role in the PC graphic cards sector even faster than expected. The takeover of Hercules is the beginning of a growth strategy which includes, besides internal growth, acquisitions of other market players as pointed out during our IPO. ELSA expects to play an active and leading role within the ongoing market consolidation phase."
ELSA AG is a stock company based in Aachen, Germany, with subsidiaries in Santa Clara (California, USA), Taipei (Taiwan), and Tokyo (Japan). Founded in 1980, ELSA has built up a world-class reputation for applying advanced engineering expertise to computer graphics and data communications products. Technological competence, German standards of quality, leading-edge products and services backed up by excellent support: These are factors which firmly place ELSA at the forefront of the market today.
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