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Roxio to Acquire MGI Software

Roxio today announced that it has signed a definitive agreement to acquire all of the outstanding shares of MGI Software, a provider of visual media software, in a stock-for-stock transaction.

Under the terms of the agreement, approximately 2.3 million shares of Roxio stock will be issued to stockholders of MGI at the close of the transaction, yielding an approximate exchange ratio of 0.05269 shares of Roxio for each share of MGI. Based on Roxio’s closing price and the exchange rate on December 3, 2001, this represents a purchase price of approximately $32.8 million.

Roxio is already the industry leader in CD recording software as its products Easy CD Creator (for Windows) and Toast (for Macintosh) hold firmly as the #1 selling CD-burning software products in the world. The addition of MGI’s video and photo editing software is expected to contribute approximately $25 million in revenues for fiscal 2003.

“This transaction is highly synergistic from both a product portfolio and marketing & distribution standpoint, and provides significant leverage in advancing Roxio’s vision as the leader in digital media software,” stated Roxio’s President and CEO Chris Gorog. “Digital photography is moving into mainstream adoption and we believe digital video is the next area of high growth. Having the number one consumer editing software for these two fast growing categories positions Roxio well for continued success and future growth as hundreds of millions of new consumers are expected to come into the digital media space over the next several years. In addition to the nearly 100 million customers already using Roxio and MGI software, this provides us with a great base to continue to broaden our business.”

“We at MGI are excited about the opportunity to join with Roxio and to take our leadership in digital imaging and video to the next level by becoming part of a leading digital media company,” stated MGI Chief Executive Officer Anthony DeCristofaro. “Roxio has a solid track record of profitable growth and positive momentum, and we believe the acquisition is a great strategic opportunity to realign MGI to capitalize on our technology and engineering prowess in these markets.”

The transaction is subject to regulatory approval in Canada and approval by MGI shareholders and is expected to close within 90 days. The Boards of Directors of both companies have voted unanimously in favor of the transaction.  

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