Avid Technology is to acquire Midiman, better known as M-Audio, a provider of digital audio and MIDI solutions

Under the terms of the agreement, M-Audio will become a business unit of Avid's Digidesign audio division. It will market its line of computer audio peripherals, PCI sound cards, keyboard controllers and control surfaces, microphones, speakers, and distributed software and proprietary sound libraries alongside Digidesign's digital-audio workstations.

Avid says it will pay approximately $80 million in cash, issue 2 million shares of Avid common stock, and assume all outstanding M-Audio stock options.

The deal also includes earn-out provisions, which would be payable to M-Audio’s equity holders based on the successful achievement of certain financial milestones.

Avid president and chief executive officer David Krall said: "With this acquisition, we’re bolstering our investment in the home studio market segment, the fastest growing portion of our audio business, where we achieved roughly 40 per cent year-over-year growth in Q2 of 2004. We believe the addition of M-Audio to the Avid family will put us in a position to provide a complete set of creative tools to the market."

Digidesign general manager and Avid vice president Dave Lebolt said: "The entry-level audio market offers attractive growth opportunities, and both Digidesign and M-Audio have demonstrated solid successes in this area. As a combined entity, Digidesign and M-Audio can tap into subsegments of this market that we would not otherwise reach as strongly on our own.

"At the same time, Digidesign will continue to focus in the professional audio space, including the expansion we’ve targeted in the mixing and live sound markets, while M-Audio will further extend its reach to an even wider consumer base. As a result, Avid will have a range of new capabilities to address the audio business, and customers will have a broader set of audio options to meet their increasingly diverse needs.”

M-Audio founder and CEO Tim Ryan, who will continue to oversee M-Audio’s operations as the general manager of Digidesign’s M-Audio business unit said: "Customers can look forward to continued innovation from M-Audio as we pursue the opportunities that will result from this combination."

M-Audio’s revenues in its fiscal year ended January 31, 2004, were approximately $51.5 million, up more than 30 per cent from its prior fiscal year. Based on its results for the first half of this year, M-Audio’s revenues are expected to grow more than 30 per cent again in fiscal 2004.