AsiaInfo Holdings, Inc. (ASIA), a provider of telecommunications software solutions, and Linkage Technologies International Holdings Limited, a Nanjing, China-based provider of software solutions and IT services for the telecom industry in China, Sunday said they signed a definitive agreement to merge, forming AsiaInfo-Linkage, Inc.
As per the agreement, Linkage shareholders will receive US$60 million in cash and about 26.8 million AsiaInfo shares upon closing of the transaction. Based on the closing price of AsiaInfo's stock on December 4, the combined company would have a market value of over US$1.8 billion.
Post-transaction, Linkage's legacy shareholders will own about 35.8% of AsiaInfo-Linkage with AsiaInfo's legacy shareholders owning nearly 64.2%. The transaction is expected to be accretive to non-GAAP earnings per share in 2010.
The merger has been approved by both companies' boards of directors. The deal is expected to close by the end of the first quarter or early in the second quarter of 2010. When the deal is complete, AsiaInfo-Linkage will have over 8,000 employees.
Upon closing, Steve Zhang, AsiaInfo's president and chief executive officer, will become president and chief executive officer of AsiaInfo-Linkage. AsiaInfo-Linkage's board of directors will comprise of nine members, consisting of six members from AsiaInfo's board and three members appointed by Linkage's board. Libin Sun, Linkage's chairman and chief executive officer, will serve as AsiaInfo-Linkage's executive co-chairman and James Ding, AsiaInfo's chairman, will serve as AsiaInfo-Linkage's co-chairman.
The combined company will have 34 patents and an additional 27 patents pending approval in China and the U.S.
According to Steve Zhang, ''We are creating the pre-eminent software solutions provider in China's telecommunications industry. The combined company's expanded service offering, extensive base of highly skilled engineers, world class R&D capabilities and complementary customer bases will enable us to better service and anticipate our customers' needs...In addition to growing our business domestically, the merged company will explore new revenue drivers by looking abroad."
Libin Sun said, "For more than 10 years, AsiaInfo and Linkage have developed innovative products, built strong relationships with all three telecom operators in China and have delivered strong financial results. In fact, from 2006 to 2008, Linkage's total revenues and net income grew at compounded annual growth rates of approximately 37.4% and 36.5%, respectively."
BofA Merrill Lynch and The Hina Group acted as financial advisors and DLA Piper and Han Kun Law Office acted as legal advisors to AsiaInfo in connection with the deal.
Barclays Capital served as financial advisor and Latham & Watkins and Global Law Office served as legal advisers to Linkage.
ASIA closed Friday's regular trade at $25.10, up $0.06 or 0.24%, on 1.79 million shares.
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