3dfx Interactive

(TDFX)

, a graphics and software designer, said Friday it will dissolve its company after selling its assets to rival

Nvidia

(NVDA) - Get Report

.

San Jose, Calif.-based 3dfx said that under terms of the asset sale, finalized today, Nvidia will pay $112 million -- $70 million in cash plus $1 million shares of Nvidia common stock, based on yesterday's closing price of $41.56.

Nvidia, based in Santa Clara, Calif, is the no. 2 supplier of chips for displaying three-dimensional graphics. It has agreed to loan to 3dfx $15 million for working capital, which 3dfx said will be credited to the cash portion of the purchase price. In addition, Nvidia agreed to dismiss its patent infringement litigation suit against 3dfx, which was filed Aug. 28. As part of the deal, 3dfx will transfer its "3dfx" and "Voodoo" brand names and trademarks to Nvidia.

Shares of Nvidia tumbled $4, or 9.64%, to $37.44 Friday on the

Nasdaq

, while shares of 3dfx closed at $1.78, near its 52-week low of $1.75.