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Tuesday, December 11, 2007

STMicroelectronics to Acquire GENESIS MICROCHIP

image STMicroelectronics and Genesis Microchip Inc. announced today that they have entered into a definitive agreement for STMicroelectronics to acquire Genesis Microchip. The acquisition confirms STMicroelectronics as a leading System-on-Chip (SoC) technology provider to the rapidly growing digital television and display markets.

Under the terms of the agreement, STMicroelectronics will commence a cash tender offer to purchase all of the outstanding shares of Genesis Microchip Inc. for $8.65 per share, net to the holder in cash, implying a total equity value of approximately $336 million. Following completion of the tender offer, STMicroelectronics will complete a second-step merger in which any remaining common shares of Genesis Microchip Inc. will be converted into the right to receive the same per share price paid in the tender offer. The offer price represents a premium of 60% to Genesis Microchip’s closing share price on Monday, December 10, 2007 and 26% to the average closing share price during the last sixty trading days prior to this announcement. During the twelve months ended September 30, 2007, Genesis reported revenues of $191 million. As of September 30, 2007, Genesis Microchip’s cash and cash equivalents and short-term investments totaled approximately $183 million. STMicroelectronics will finance the acquisition using existing cash on its balance sheet.

The acquisition has been approved by the Board of Directors of Genesis, which has unanimously recommended that holders of Genesis Microchip’s common stock accept the tender offer and approve the second-step merger. The tender offer, which STMicroelectronics expects to commence no later than December 18, 2007, and the second-step merger, are both subject to customary conditions, including receipt of regulatory approvals, and are expected to be completed in the first quarter of 2008.

Through this acquisition, STMicroelectronics expects to expand its leadership in the $1.5 billion digital TV market, one of the fastest growing segments in consumer semiconductors. Genesis Microchip will enhance STMicroelectronics’s technological capabilities for the transition to fully digital solutions in this segment and strengthen its product and intellectual-property portfolio.

“STMicroelectronics is a leader in digital consumer technologies, with a strong position in set-top box compression and decompression technologies and “front end” processing technologies in digital TV. Genesis is a leader in “back-end” image and video processing and digital interconnect technologies,” said Philippe Lambinet, Corporate Vice President and General Manager of STMicroelectronics’s Home Entertainment & Displays Group. “The combined company will have the products, technology, IP and expertise to offer best-in-class integrated DTV processing solutions that our customers are increasingly demanding. We also believe that the Genesis DisplayPort technology brings expanded opportunities to the PC and home entertainment markets.”

“This combination represents an exciting opportunity for Genesis,” said Elias Antoun, Genesis Microchip’s President and Chief Executive Officer. “Joining forces with STMicroelectronics will put us in the best position to ensure that our products and technologies remain at the forefront of our industry. Our innovative technology, when combined with STMicroelectronics’s resources, silicon design expertise and manufacturing capabilities can accelerate the delivery of the next generation of solutions for our digital television, flat-panel display and DisplayPort customer base.”

On closing, Genesis will become part of STMicroelectronics’s Home Entertainment & Displays Group. Elias Antoun will join STMicroelectronics and will lead STMicroelectronics’s television and display initiatives, reporting to Philippe Lambinet.

Morgan Stanley acted as exclusive financial advisor to STMicroelectronics and Shearman & Sterling LLP acted as legal counsel. Goldman Sachs acted as exclusive financial advisor to Genesis Microchip and Wilson Sonsini Goodrich & Rosati Professional Corporation acted as legal counsel.

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