Avid to Acquire Video Software Maker

Avid Technology Inc., whose equipment was used to edit the Oscar-winning film “Million Dollar Baby,” said Monday that it would buy Pinnacle Systems Inc. for $462 million to boost its line of video-editing products for consumers.

Stockholders would get 0.0869 share of Avid stock and $1 in cash for each Pinnacle share, the company said. That is equal to $6.47 a share, 30% more than Pinnacle’s closing price Friday.

The purchase would expand Avid’s line of products sold to consumers, following its purchase last year of home-recording gear maker Midiman Inc. for $174.5 million.

Avid, based in Tewksbury, Mass., is out to take consumer video market share from Cupertino, Calif.-based Apple Computer Inc., First Albany Capital analyst Randall Scherago said.

Shares of Mountain View, Calif.-based Pinnacle were down 42% in the last year through Friday.

“When we look at the things that have been contributing to their immediate performance difficulties, we feel they are problems we understand and can help with,” Avid Chief Executive David Krall said. “We see some big ways to save money and some big ways to make money.”

Avid shares, which had risen 41% in the last year, fell $6.34 to $56.61 on Nasdaq. Pinnacle rose 77 cents to $5.74, also on Nasdaq.

Avid would pay $71.3 million in cash and issue 6.2 million shares to Pinnacle in a purchase expected to close by October. Buying Pinnacle would trim third-quarter profit and add to earnings in the fourth quarter, the firm said.

Avid would form an editing division to sell Pinnacle’s video software and electronic boxes that connect televisions to personal computers.