Monday, December 7, 2009

Top Holding AsiaInfo Holdings (ASIA) up 25% on Purchase of Competitor Linkage Technologies (BOSS)


Our top long position AsiaInfo Holdings (ASIA) is currently up 25% on a purchase / merger with competitor Linkage Technologies (BOSS).  Linkage was set to go IPO this week - we spoke of both companies just last week. [Dec 1, 2009: IBD AsiaInfo Holdings China's 3G Conversion Boom Boosts Telecom Software Firm's Holdings; Competitor Linkage Technologies to IPO Next Week]

Can I get a Boo Yah?
  • AsiaInfo Holdings, Inc. (ASIA) and Linkage Technologies International Holdings Limited ("Linkage"), leading providers of software solutions and IT services for the telecommunications industry in China, today jointly announced that they have signed a definitive agreement to merge, forming AsiaInfo-Linkage, Inc. ("AsiaInfo-Linkage").
  • 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 US$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 US$1.8 billion.
  • Post-transaction, Linkage's legacy shareholders will own approximately 35.8% of AsiaInfo-Linkage with AsiaInfo's legacy shareholders owning approximately 64.2%. The transaction is expected to be accretive to non-GAAP earnings per share in 2010.

More details to come; just had to pick myself up off the floor after falling out of chair when I saw the stock up 25%.  I am going to sell HALF the position here around $31, while I process the information and do some reading on this transaction.

This is a good move in terms of consolidating the space; as the piece last week explained both these names are #1 thru #5 in multiple sub niches - together I assume they will be #1 or #2 in all of them.  Talk about drama, ASIA swoops in days ahead of the IPO. 
  • 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.
[Aug 11, 2009: Bookkeeping - Beginning Placeholder Stake in AsiaInfo Holdings]
[Aug 7, 2009: Niche Play on China Telecom - AsiaInfo Holdings]

Long AsiaInfo Holdings in fund; no personal position

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