Singapore - Singaporean-founded gaming hardware startup Razer has acquired THX, the 33-year-old theatre sound company born out of the Star Wars legacy and founded by George Lucas. While financial terms were not disclosed, the deal aims to make Razer an all-round entertainment company and is not a white-knight buyout, The Business Times has learnt.
Tan Min-Liang, founder and chief executive officer (CEO) of Razer, told BT that the San Francisco-based company has snapped up the majority of THX's assets - including its employees and intellectual property (IP) - to reinforce Razer's leadership in gaming, while extending product development to new aspects of entertainment, such as music and movies.
He said: "Razer wants to become the largest entertainment company in the world. A lot of convergence is happening in entertainment today; it is a very timely acquisition."
Asked what attracted Razer to THX, Mr Tan said that he and the company have been "longtime fans" of the brand. "THX is one of the biggest names in audiovisual. Any moviegoer would be familiar with THX. In the past 30 years, THX has developed bedrock competencies in certification and optimisation of audio, and the most fundamental IP in audiovisual."
Following the acquisition, THX will operate as an independent entity under its own management - distinct from the ongoing business of Razer. Mr Tan noted that this was not an "acquihire" (the buyout of a company primarily for the skills and expertise of its staff) even though THX boasted a "top talent" pool of scientists, designers and engineers, because THX employees will be retained in THX.
Ty Ahmad-Taylor, CEO of THX, added that THX's focus has always been on producing high-quality entertainment, regardless of the medium. He said: "With Razer, we can continue to push into uncharted territory." BT understands that this includes live streaming, virtual reality and gaming.
BT also understands that THX will become a portfolio company of zVentures, Razer's recently-launched corporate ventures arm and manager of its first US$30 million (S$41.6 million) fund. Under zVentures, THX will enjoy access to capital, resources and follow-on investors. There are near-term plans to invest in THX, according to Mr Tan.
When asked if this marks a white-knight buyout of a perhaps less-relevant company, Mr Tan said no. "THX is not any less relevant today. There is still a lot of brand recognition with THX. It recently expanded its performance-certification programmes from theatres and home hi-fi equipment to live concerts."
THX, founded in 1983 as a division of Lucasfilm, was spun off in 2002 and owned by Singapore's Creative Technology until 2012. The latter had held a 60 per cent share in THX, and reportedly created the first THX-certified audio card for computers.
Asked if Razer had any business dealings with fellow Singapore company Creative, a Razer spokesman said that Razer had dealt directly with THX from which it purchased its business and assets, and is now the majority shareholder of the company.
Entrepreneur and angel investor Leslie Loh noted that the acquisition would not have much impact on Singapore's startup ecosystem as the value-add is "incremental". Hian Goh, founding partner of NSI Ventures, agreed that the acquisition is "very far removed" from activities here.
Mr Goh said however that "if anything, it just proves that billion-dollar companies can come from Singapore." Razer is a "unicorn" believed to be valued at over US$1.5 billion, and is known in the global gaming arena for its high-end gaming products ranging from mice and keyboards to wearables and software.
Jeffrey Paine, managing partner of Golden Gate Ventures, added that Razer's acquisition of THX is "definitely a great story for our ecosystem".
He told BT: "You can call it a cycle. Basically, Creative, a homegrown company brought us the sound card for personal computers. Now 30 years later, Razer, a Singaporean-founded company, owns THX, the gold standard of audio."
This article was first published on October 18, 2016.
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