Computer companies form alliance

By Plant Engineering Staff December 12, 2005

ASUSTek and Advantech will enter a strategic alliance through a share swap. ASUSTek Computer Inc. supplies motherboard and graphics card notebooks. Advantech Co., Ltd. supplies industrial computing products including motion control, measurements, communication, embedded computing, industrial motherboards, applied computing and peripherals.

ASUSTek and Advantech will collaborate on new product developments, manufacturing and quality; and set up a joint venture (tentatively AdvanSus) to pursue new business opportunities in industrial computing. Combining their respective complimentary core competences, ASUSTek and Advantech will exert their efforts to develop the highly potential Industrial computing segments, address the customer needs and create shareholders value.

ASUSTek and Advantech will contribute dedicated talents and resources to the new joint venture, which will enter the highly potential markets such as industrial computing Design & Manufacturing Service (D&MS), industrial mobile, industrial motherboard, and industrial server segments. The joint venture is expected to start operation mid-2006.

Under the terms of the strategic alliance agreement, ASUSTek will hold 15% of Advantech’s share, one seat on Advantech’s Board of Directors and one supervisor. Advantech will own 1.4% of ASUSTek’s shares. ASUSTek will issue new shares in exchange of 10% of Advantech’s share after Advantech’s capital increase. For the remaining 5%, Advantech will arrange specific current shareholders to make the share exchange with ASUSTek. The swap ratio is set at 1.13 shares of Advantech to 1 share of ASUSTek. The ratio is mainly derived from both companies’ recent stock market prices, with reference to other key performance indicators such as net worth per share, earnings per share, and future business potentials.