Pixelworks, Inc. (NASDAQ:PXLW) To Acquire ViXS Systems In All Stock Transaction

Pixelworks, Inc. (NASDAQ:PXLW)

Pixelworks, Inc. (NASDAQ:PXLW) has signed a definitive agreement that paves the way for it to complete the acquisition of media processing and transcoding solutions provider ViXS Systems. The company has agreed to buy all outstanding common shares of the Toronto-based company in an all-stock transaction valued at $20.2 million.

Pixelworks-ViXS Merger

The all-stock transaction consists of 3.7 million shares of Pixelworks, Inc. (NASDAQ:PXLW) common stock. Each common share of ViXS is to be exchanged for $0.04836 of a share of Pixelworks common stock. Based on a 60-day trailing average stock price, the transaction represents a 47% premium.

The transaction is still subject to a number of closing conditions including approval by an Ontario Superior Court Justice. ViXS shareholders will also have to unanimously approve the deal in an upcoming vote.

ViXS is to hold an annual special meeting of shareholders on July 28, 2017, to deliberate on the merger and vote. The board of directors of the two companies have already given the green light for the merger to proceed.

Merger Expectations

Pixelworks, Inc. (NASDAQ:PXLW) is acquiring ViXS as part of an effort to strengthen its current patent portfolio with the addition of 470 issued and pending patents worldwide. The transaction should also give the company access to new product offerings that should further diversify its revenue base and target market. The company is also planning to advance ViXS industry Leading Cord Cutter Platform that seeks to address the needs of people viewing broadcast video and content.

Pixelworks, Inc. (NASDAQ:PXLW) president and chief executive officer, Todd DeBonis, expects the deal to deliver meaningful value to shareholders as well as the two company’s customers. The transaction is expected to be accretive to Pixelworks full year 2018 earnings.

“Today’s announced acquisition of ViXS represents a unique opportunity to strengthen our position as a known technology leader with extensive visual and video processing expertise. In addition to adding highly complementary technology and product offerings, the transaction is expected to provide the potential to meaningfully accelerate the development of comprehensive end-to-end video streaming solutions, “said Mr. DeBonis

ViXS CEO, Sohali Khan, on the other and expects the deal to present a compelling growth opportunity as they target greater scale and market penetration. By merging with Pixelworks the company is also looking towards gaining access to world-class engineering and technology much needed to monetize industry evading innovation.

Pixelworks, Inc. (NASDAQ:PXLW) stock was down by 6.8% in Friday trading session ending the week at $5.48 a share.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

Pixelworks, Inc. (NASDAQ:PXLW) Breaks Out?

Pixelworks, Inc. (NASDAQ:PXLW)

Pixelworks, Inc. (NASDAQ:PXLW) has performed well over the past quarter (+37.23%), year (+79.17%), and also YTD (+38.21%). Today volumes were strong and PXLW reached over the analyst’s consensus price target of $4.50. The average daily volume figure for PXLW is 339,500 but with almost an hour of trading left over 1.5 million shares had traded hands and PXLW had gained over 15%.

At the end of January, Pixelworks, Inc. (NASDAQ:PXLW) released their Q4 and full year financials. After that well received news, PXLW shares gained over 35% during the month of February. It is obvious that traders respond to news on PXLW shares which is what makes today’s price action curious. There is no news on the wires or chat boards.

The Average True Range (ATR) for PXLW is $0.21 which is expected given a stock with a price below $5. The ATR is used as a measure of a stock’s volatility and is a calculation based on the highs and lows a stock has reached over the trading day(s). Today the difference between the day’s high and low is $0.90 – more than four times the ATR.

Traders may be playing on the 52-week high figure which could represent a break-out. Prior to today’s trading shares of Pixelworks, Inc. (NASDAQ:PXLW) were less than 1% away. Some experts believe that traders are pushing the stock over that level to entice other traders, or trading programs, to recognize the price action breaking that high and buying into a momentum play. Volumes might point to some support for this – today’s volumes are over 5 ½ times the average daily volume.

3/8/2017
Ticker Symbol PXLW
Last Price a/o 3:31 PM EST  $                      4.44
Average Volume                    339,250
Market Cap (mlns)  $                  114.20
Sales (mlns) $53.40
Shares Outstanding (mlns) 29.51
Share Float (mlns) 23.71
Shortable Yes
Optionable Yes
Inside Ownership 3.00%
Short Float 3.50%
Short Interest Ratio 4.56
Quarterly Return 37.23%
YTD Return 38.21%
Year Return 79.17%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.