New York, Aug 06: Chipmakers Genesis Microchip and Pixelworks said on Tuesday they had ended a merger agreement as it was not in the best interest of their shareholders. The $440 million deal would have expanded the two companies' reach in the market for chips that power television screens and flat panel displays.

Last week, Genesis Microchip shares fell more than 20 per cent as analysts questioned whether the merger plan would go through and forecast further declines in prices of flat panel monitors.

The deal had been structured as a reverse takeover whereby Pixelworks would have issued stock to Genesis shareholders, who in turn would have ended up with a majority stake in the combined company. Under the terms of the deal, Pixelworks has agreed to pay Genesis $5.5 million as reimbursement for expenses.

"The decision to terminate the merger was based on our mutual agreement of what was best for the stockholders of each company," Pixelworks president, CEO and chairman Allen Alley said in a statement.

The chips made by the two rivals are used in the hot sector for flat panel displays, TV screens and multimedia projectors. Consumers have benefitted as plummeting prices have brought better pictures to a host of new gadgets and monitors. Bureau Report