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MediaTek Consolidates With Ralink to Develop Network Connectivity Capability

2011/03/18 | By Ken Liu

Taipei, March 18, 2011 (CENS)--MediaTek Inc. recently announced consolidating with Ralink Corp. through stock swap to pave way for its entry into the network-connectivity chip sector to cash in on lucrative business in the trendy digital-convergence market.

The swap ratio is set at one MediaTak share for 3.15 Ralink shares, putting the merger at NT$18.2 billion (US$606 million at US$1:NT$30) in combined capital. The deal is said to be the biggest merger in Taiwan's IC design sector and will further cement MediaTek's position as Taiwan's No.1 design house.

MediaTek President C.J. Hsieh pointed out the merger will help fill in the company's blanks in personal-computer and tablet-PC sectors and boost its competitiveness in the smarptphone sector, all of which are crucial to the emerging digital-home and digital-convergence applications. He expected the merger to begin producing effect in one year.

After the swap, Ralink equities will account for around 4.58% of MediaTek's total stock, too low to qualify the company for seats at MediaTek board of directors.

Hsieh pointed out that most of Ralink management team will join MediaTek and the merged body will operate as a business unit within MediaTek after the consolidation. Last year alone, Ralink raked in revenue of NT$9.3 billion (US$310 million), suggesting its notable capability to help drive up MediaTek's revenue in the years to come.

MeidaTek's in-house teams will stay focused on R&D of smartphone solutions while Ralink teams will work on solutions for PCs, netbooks and tablet PCs.

Combining with Ralink enables MediaTek to develop wireless and wirelined network-connectivity solutions thanks to Ralink's previous acquisition of Trend Chip.