MANHASSET, N.Y. — Digital projection pioneer InFocus Corp. has agreed to merge with Image Holdings Corp.

Image Holdings and its wholly-owned subsidiary, IC Acquisition Corp., will make an all cash tender offer to acquire all outstanding shares of InFocus stock at $0.95 per share, or approximately $39 million. The InFocus board unanimously recommended that company shareholders accept the offer, which represents a 36 percent premium over the company's closing price of $0.70 on April 9, the last trading day prior to the agreement. The tender also represents a 90 percent premium over the 30-day average closing price of $0.50.

The deal, which will result in InFocus becoming a wholly-owned subsidiary of IHC, is expected to close in the second quarter of 2009. "I look forward to working with InFocus management and building on the company's innovative history and product leadership to return the company to a dominant position in the industry," John Hui, the controlling shareholder in IHC, said in a statement.

Hui co-founded eMachines, now part of Acer Inc.

"Operating as a privately held company is expected to reduce our costs and facilitate our ability to focus on longer-term priorities," said Bob O'Malley, president and CEO of InFocus.

Thomas Weisel Partners LLC served as financial advisor to InFocus and its board of directors. Averil Capital Markets Group acted as financial advisor to IHC.

InFocus has been developing digital projector technology for more than 20 years. It holds over 245 patents.