S3 to buy Diamond Multimedia

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S3 to buy Diamond Multimedia

In a bid to buy its way into the Internet appliance and home networking markets, S3 Inc. has entered into a definitive agreement to acquire Diamond Multimedia Systems Inc. in a a stock swap worth $175 million.

S3 says it plans to maximize the Diamond’s strengths to become a “total solutions provider” for the graphics business, supplier silicon, software and PC boards to its OEM customers.

S3 will also get control of Diamond’s promising Rio MP3 music player, and its HomeFree wireless and phoneline-based home networking product line. In addition, S3 says it will continue to aggressively invest in Diamond’s DSL and cable modem programs.

S3’s web site address is www.S3.com. Diamond’s site is located at www.diamondmm.com.

ZDNN reports that many Diamond investors aren’t happy with the deal, saying that S3 is paying too little for Diamond’s stock. The analysis is posted at www.zdnn.com.