Transmeta agrees to Novafora acquisition

Transmeta's third-quarter earnings report will not be brought to you as scheduled today. Instead, the company will speak tomorrow morning about its just-announced acquisition by video processor firm Novafora.

The all-cash deal for $255.6 million (subject to the usual working capital and other adjustments) should deliver unto shareholders a return of between $18.70 and $19 per share -- nicely above even the 52-week high of $17.79. Transmeta was trading at $18 in after-hours activity.

Both boards of directors have signed off on the deal, the terms of which include a stipulation that Transmeta will not enter into any future licensing transactions without Novafora's consent. In related news, Transmeta also announced today that it has entered into a non-exclusive patent license agreement with chipmaker AMD (Advanced Micro Devices); that agreement includes the transfer from AMD to Transmeta of 700,000 shares of Transmeta Series B Preferred stock.

AMD was at one point believed to be in the market for Transmeta.

Since its founding in 1995, Transmeta has sported a reputation for interesting chip-design theory and world-class hype. After a boom-era run that included being denoted Silicon Valley's "most important company" in an Upside editorial and attracting star power such as Linus Torvalds (temporarily) to the fold, the company spent most of the past few years fighting intellectual-property skirmishes and fishing for licensees. It folded its hardware-development efforts in 2007, having never turned a profit as a chip vendor.

Novafora was founded in 2004. On its Web site, it describes its mission as accelerating the digital video revolution with a family of video-optimized processors featuring a fully programmable video engine.