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Gigabyte and ASUStek Merge
Date: Wednesday August 09, 2006
Category: Business / Industry
Manufacturer Link: Gigabyte
GIGABYTE Technology intends to hold 51% of the shares and ASUSTek will hold 49%. This joint venture plans to commence operating in January 2007.

In accordance with the relevant regulations according to Company Law, Securities Law and Business Merger & Acquisition Law, a resolution of the board of directors was passed on the 8th of August, 2006 for GIGABYTE Technology Co., LTD (Stock Code: 2376) to transfer the relevant assets and businesses of its own branded motherboards and VGA cards to a newly established subsidiary. After all the necessary legal procedures and obligations have been fulfilled, ASUSTek Computer Inc. (Stock Code: 2357) plans to invest in this newly established GIGABYTE subsidiary to help manage the joint venture and develop a strategic alliance with GIGABYTE. Both parties will work together to increase operation efficiency, enhance product quality, provide better customer service and create a higher value for shareholders.

The capital of this joint venture will be NT$ 8,000,000,000 (eight billion NT dollars). GIGABYTE Technology intends to hold 51% of the shares and ASUSTek will hold 49%. This joint venture plans to commence operating in January 2007. There will be five directors and two supervisors in this joint venture, with GIGABYTE appointing three seats of directors and one supervisor, and ASUSTek appointing two directors and one supervisor.

According to the Institute of Information Industry (MIC), the total value of motherboards produced in 2005 was US$8.9 billion, a growth rate of only 2.2% from year 2004. The total value of motherboards produced for the first half of 2006 has fallen to US$3.67 billion in comparison to the US$3.75 billion for the first half of 2005. In addition, the leading brand PC manufacturers have increasingly enlarged their market share, causing the market share for the motherboard channel to decline dramatically. In this slow developing market environment, GIGABYTE seeks to establish an alliance with ASUSTek in order to assist the operation efficiency of GIGABYTE’s motherboard business. Apart from increased efficiency, GIGABYTE will have greater resources to expand their diversified business. Because of the increasingly mature nature of the motherboard industry, this joint venture will combine the resources of two leading motherboard manufacturers, allowing for a greater economical impact on the market, better research and development capabilities and elevated product quality. It is believed that this strategic alliance will create a win-win situation for shareholders, employees and customers of both companies.

Company Profile:

GIGABYTE Technology Co., Ltd is one of the five largest motherboard manufacturers in the world. Its products include motherboards, VGA cards, barebone systems, networking and communication products, servers and digital home devices. Through its subsidiaries, GIGABYTE also focuses on notebook and mobile communications research, development and marketing. GIGABYTE sold 16 million units motherboards in 2005 and expects to ship 18 million units in 2006. GIGABYTE currently has more than 8,000 employees worldwide.

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