The proposed acquisition would expand Virage Logic's ability to serve the global semiconductor market by complementing its existing portfolio of physical IP and standards-based advanced interface IP with ARCs processor IP, a necessary component for complex system-on-chip (SoC) integrated circuits.

The proposed all-cash transaction values ARC at 16.25 pence per share, or an equity value of approximately £25.2 million (about $41 million) on a fully-diluted basis.

The directors of ARC have unanimously recommended that ARCs shareholders accept the offer. Virage Logic expects that the offer document will be mailed to ARC shareholders shortly.

The offer period will extend for a minimum of 21 days from the date the offer document has been mailed, and the transaction is expected to close by the end of Virage Logics first fiscal quarter of 2010, which ends on December 31, 2009.

The offer is subject to certain limited closing conditions, including that at least 90 percent of the ARC shares have been tendered into the offer.

"The acquisition of ARC would represent another significant milestone in the execution of our vision of establishing Virage Logic as a broad-line supplier of highly differentiated semiconductor IP to our global IDM, foundry and fabless customers," said Dan McCranie, Virage Logics executive chairman.

"Through both our organic and inorganic growth initiatives, we have significantly expanded our portfolio of standard products. With approximately $24 million in revenue for the trailing twelve months ended June 30, 2009 and over 150 customers, ARC would contribute meaningful scale to our business. Furthermore, ARC would significantly expand our market opportunity to include microprocessor cores, the largest segment of the semiconductor IP market."

"In our engagements with well over 300 existing worldwide customers, we have seen the need to provide additional IP building blocks to enable successful and timely development of large SoC products," said Dr. Alex Shubat, president and CEO of Virage Logic.

Richard Barfield, chairman of ARC added, "As Virage Logic has recognized, the combination of the technology, expertise and customer bases of ARC and Virage Logic will create substantial opportunities for the enlarged group and its customers. In addition, the ARC directors believe that the offer delivers value and certainty to ARC shareholders."

Virage Logic expects the proposed acquisition to be accretive between $0.10 and $0.14 earnings per share to fiscal year 2010. Immediately following the closing of the acquisition, Virage Logic expects to have a cash balance of approximately $20 - $23 million.

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