Asustek Computer convened a board meeting on December 11 to resolve the spin-off of Pegatron, its ODM business group, with the board approving of a capital reduction for Asustek and the establishment of Pegatron Investment Holding, which will assume 100% of the company's equity investment in Pegatron.
Pegatron Holding will issue 2.286 billion new shares to Asustek and all shareholders of Asustek. Asustek is expected to receive 25% of the equity and other shareholders will receive 75%, in proportion to their shareholdings in Asustek. The estimated value of the business assigned to Pegatron Holding, through this spin-off, is NT$ 92.894 billion and shareholders of Asustek will receive 75% of that equity – a total value of NT$69.67 billion.
Asustek, at the same time, will reduce its capital based on the value of the business spun off. The capital reduction ratio of Asustek is expected to be 85%, where the number of issued shares will be reduced by 85% and the net worth will be reduced by 42%, reducing the net worth by NT$69.67 billion, the same value placed on Pegatron holding.
The spin-off date is expected to be on July 1, 2010.
For shareholders of Asustek, they currently hold 100% of their shares in Asustek, and indirectly hold 100% of the shares in Pegatron through Asustek. After the capital reduction, the shareholders will directly hold 100% of the shares in Asustek and 75% of the shares in Pegatron Holding, and indirectly hold 25% of the shares in Pegatron Holding through Asustek.
Although the nominal number of shares held by the shareholders will be reduced as a result of the capital reduction, the net shareholders' equity value conveyed by each share will consequently be increased. In all, there will be no effect to the total equity held by the shareholders, Asustek indicated.
After the spin-off and capital reduction, 75% stake in Pegatron Holding and the equity in Pegatron held by Pegatron Holding will be transferred to all shareholders of Asustek to complete business separation and independent operation for Pegatron.
The business outlook and competitiveness of Pegatron shall be improved as a result. Asustek also plans to merge Pegatron Holding and Pegatron in the future in accordance with the relevant laws and regulations where it is tentatively expected that Pegatron will be the surviving company, and will actively prepare the application for listing. Pegatron is expected to be listed on the Taiwan Stock Exchange in the latter half of 2010.
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