Novafora to Buy Transmeta for $256 Million

SAN JOSE, Calif. (AP) -- Digital video chipmaker Novafora said Monday that it's buying Transmeta(TMTA Quote) for $255.6 million in cash.

Transmeta develops and licenses low-power processor technology that saves on battery use for laptops and other devices.

"Adding Transmeta's power management technology to our video processor will advance our vision of making our products applicable across the broadest range of video-oriented devices," said Novafora CEO Zaki Rakib, in a statement.

Privately held Novafora will pay Transmeta shareholders between $18.70 to $19 a share, depending on Transmeta's future working capital and other adjustments. The deal is expected to close in the first quarter of 2009.

The boards of both companies have approved the acquisition.

Separately, Transmeta said it entered into a non-exclusive patent license agreement with Advanced Micro Devices(AMD Quote). The deal calls for chipmaker AMD to transfer 700,000 shares of Transmeta's Series B preferred stock back to the company.

AMD was once thought to be a potential buyer of Santa Clara, Calif.-based Transmeta. AMD invested $7.5 million in Transmeta in July in exchange for preferred stock.

Shares of Transmeta rose 82 cents, or nearly 5%, to $17.52 on Monday.