BEIJING, CHINA & SANTA CLARA, USA: AsiaInfo Holdings Inc. and Linkage Technologies International Holdings Ltd, leading providers of software solutions and IT services for the telecommunications industry in China, have signed a definitive agreement to merge, forming AsiaInfo-Linkage Inc.
The transaction will leverage both AsiaInfo's and Linkage's leading market positions and complementary customer bases to provide a robust, full-service offering to telecom operators.
Under the terms of the agreement, Linkage shareholders will receive $60 million in cash and approximately 26.8 million AsiaInfo shares upon closing of the transaction. Based on the closing price of AsiaInfo's stock on December 4, 2009, the combined company would have a market value of over $1.8 billion.
Post-transaction, Linkage's legacy shareholders will own approximately 35.8 percent of AsiaInfo-Linkage with AsiaInfo's legacy shareholders owning approximately 64.2 percent. The transaction is expected to be accretive to non-GAAP earnings per share in 2010.
Upon completion of the transaction, AsiaInfo-Linkage will have over 8,000 employees, of which approximately 7,000 are engineers dedicated to project delivery and research and development. The combined company will also have 34 patents and an additional 27 patents pending approval in China and the United States.
"We are creating the pre-eminent software solutions provider in China's telecom industry," said Steve Zhang, AsiaInfo's president and CEO. "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.
"Going forward, we will leverage our products and services which range from system implementation and maintenance services to high-value consulting in order to capitalize on China's fast-growing telecom software industry. In addition to growing our business domestically, the merged company will explore new revenue drivers by looking abroad."
"This is a very exciting development and milestone for our company and an important move that will benefit China's telecom software industry," commented Libin Sun, Linkage's chairman and chief executive officer.
"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 percent and 36.5 percent, respectively. With common business strategies and a plan to fully integrate our management teams and internal systems, I am confident that we will be able to quickly identify business opportunities and realize value for our shareholders."
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 Mr. James Ding, AsiaInfo's chairman, will serve as AsiaInfo-Linkage's co-chairman.
The merger has been approved by both companies' boards of directors and is subject to customary closing conditions including the receipt of any regulatory approvals and the approval of AsiaInfo's shareholders. The transaction is expected to close by the end of the first quarter or early in the second quarter of 2010.
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 transaction. Barclays Capital served as financial advisor and Latham & Watkins and Global Law Office served as legal advisers to Linkage.