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Shares of SRS Labs Inc. soared Tuesday after the Santa Ana-based audio company said it was being acquired by a competitor.
Investors sent SRS shares up more than 36% in afternoon New York trading to a market value of about $134 million on word the company is set to be bought by Calabasas-based DTS Inc. for $148 million in a cash and stock deal.
The price represents a 38% premium on SRS Labs’ stock price at of the close of trading Monday.
DTS expects to close the transaction in the third quarter.
SRS makes software and other components that boost sound quality in audio devices.
The company will add scale, customers and key patented technologies to DTS’s suite of offerings, particularly for its specialization in the Blu-Ray disc segment.
The marriage between two of the leading audio technology companies also promises to fuel DTS’ expansion in the rapidly growing mobile market, while cutting operating, customer and licensing costs, executives said.
DTS expects the transaction to boost earnings immediately and cut $8 million in annual costs.
The two had combined revenue of $130 million last year.
SRS Chairman and Chief Executive Thomas C.K. Yuen controls about 20% of outstanding SRS shares and has signaled his approval of the deal. Yuen is expected to join the DTS board after the transaction closes.
Shares of DTS were up 1.8% on Tuesday to a market value of $493 million.