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Taipei, March 12, 2010 (CENS)--Ralink Technology Corp. and Trendchip Technologies Corp. yesterday announced they will merge via a stock swap to create Asia`s No.1 entity of network-communications chips.
The two companies will swap their stocks at the ratio of each Ralink common share for 0.8209 Trendchip common share. Ralink will be the exclusive surviving entity after the merger.
Currently, Ralink is Asia`s No.1 WiFi-chip supplier while Trendchip is Asia`s No.1 vendor of wireline broadband chips. The merger will create a new entity capable of integrating wireless area network and broadband network and catapult it into the list of world top 30 chip vendors.
The merger deal was approved yesterday by director boards of the two companies, which will each hold a shareholders conference on June 4 to vote on the merger deal. Once passed, the baseline date for the merger will be set on Oct. 1.
Ralink`s chairman, Chris Kao, pointed out that the two companies had combined revenue of NT$7.3 billion (US$228 million at US$1:NT$32) last year alone. He set the 2010 revenue goal at a combined NT$10 billion (US$312 million) and goal of US$10 billion in five years.
Kao said the merger will make the two companies complementary to each other, as Ralink has developed strong presences in Europe and North America whereas Trendchip has deepened involvement in mainland China.
Market researchers at Topology Research Institute of Taiwan estimated the merger to begin producing result in six month to a year, with the two companies` market ranking in mainland China to leap forward considerably.
Ralink`s capitalization will increase to NT$1.7 billion (US$53 million) after the merger and NT$1.8 billion (US$56 million) after a planned private equity placement, a rise from current NT$1.2 billion (US$39 million).
Ralink plans to carry out a private equity placement in hope of inviting international partners into it. Industry watchers speculate the company would enter into alliance with Atheros to combat Broadcom via the placement.
(by Ken Liu)
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