3Dlabs to be Acquired by Creative Technology

Combined Company to Drive for Increased Graphics Market Share;3Dlabs Will Continue to Sell, Support and Develop Existing Products

Hamilton, Bermuda -- 3Dlabs, Inc. Ltd. (NASDAQ:TDDD), announced thatit has signed a definitive agreement with Creative Technology Ltd.(NASDAQ:CREAF) to be acquired in a stock and cash transaction. Subjectto the terms and conditions described below, Creative will purchase3Dlabs stock at $3.60 per share, with two-thirds being converted toCreative stock and one-third to cash, valuing the company atapproximately $170 million.

The companies expect that the combination of 3Dlabs' technology andCreative's manufacturing, financial and distribution resources willenhance the development of 3Dlabs' planned products, which includes ananticipated re-entry into the volume desktop graphics market. Creative,a shareholder of 3Dlabs, has enjoyed a close relationship with 3Dlabssince the company's inception in 1994. The two companies jointlylaunched the industry's first 3D gaming board in 1995 and enjoyedsignificant mutual success with the Permedia 2 family of graphicsprocessors.

3Dlabs will continue to supply, support and develop all of itsproduct lines, including Wildcat and Oxygen, with no expecteddisruption in supply to any of its customers. 3Dlabs will also continueto supply and support its chip and IP products to its embeddedcustomers and will carry on its industry-leading standardizationactivities with OpenGL 2.0, OpenML and embedded OpenGL in the KhronosGroup and the Web3D Consortium.

"We see great opportunities to leverage 3Dlabs' high-endprofessional market leadership into higher volume PC desktop productsthat satisfy power gamers' insatiable demand for faster graphics," saidSim Wong Hoo, Chairman and CEO of Creative. "We have analyzed 3Dlabs'forthcoming products and technology roadmap and we believe that theirdevelopment of a scalable visual processing architecture with newlevels of programmability and flexibility will provide a significantcompetitive advantage in the graphics space. The technologicalbreakthroughs that 3Dlabs has achieved to date, coupled with the strongmarket we see for high-performance graphics processors, provide atremendous growth opportunity for our company."

"We are very excited about the opportunity provided by Creative'sworldwide distribution network, huge customer base, world-famousbrands, and financial resources to maximize the technology we produce,"said Osman Kent, Chairman and CEO of 3Dlabs. "Integrating the resourcesand expertise of these two industry-leading companies can create atruly potent force in the graphics market."

Kent continued, "The timing of this acquisition is fortuitous, as weare close to releasing the most exciting high-performance graphicslineup in our history. We have experienced a difficult financial periodduring which we continued to devote significant resources to thedevelopment of our breakthrough technologies. Creative can provide usthe resources and opportunity to expand our leadership position beyondthe high-end professional graphics market. We can leverage Creative'svast experience at building global brands and market share to take fulladvantage of the market potential for our upcoming release of anexciting new family of graphics processors for the desktop."

Under the terms of the agreement, unanimously approved by Boards ofDirectors of both companies, 3Dlabs shareholders will receive $1.20 incash and Creative ordinary shares with a value of $2.40 (such sharesgenerally to be valued based on the average closing price on NASDAQ forthe 10 trading days ending on the fifth trading day prior to the3Dlabs' shareholder meeting to approve the transaction) for each shareof 3Dlabs. Closing of the transaction is subject to the approval of3Dlabs shareholders, expiration of the U.S. HSR antitrust waitingperiod and other customary closing conditions.

About Creative

Creative (NASDAQ: CREAF) is the worldwide leader in digitalentertainment products for the personal computer and the Internet.Famous for its Sound Blaster and for launching the multimediarevolution, Creative is now driving digital entertainment on the PCplatform with products like its highly acclaimed NOMAD Jukebox.Creative's innovative hardware, proprietary technology, applicationsand services leverage the Internet, enabling consumers to experiencehigh-quality digital entertainment -- anytime, anywhere.

About 3Dlabs

3Dlabs is a market-leading graphics vendor, supplying graphicsaccelerator solutions for professionals in Computer Aided Design (CAD),Digital Content Creation (DCC) and visual simulation markets. Itsaward-winning Oxygen and Wildcat graphics are available in theindustry's top OEM workstations, through an internationaldistributor/reseller network, and directly to end-users at 3Dlabs'online store. For more information on 3Dlabs, visit www.3dlabs.com.