Ralink Technology Corp (雷凌科技) could use its planned private placement to develop closer relationships with important allies in the business of wireless networking solutions to compete with strong rivals such as Broadcom Corp, analysts said.
“We expect the company’s placement to target strategic investors who can help expand its customer base,” Citigroup analyst Timothy Lam (林子謙) said in a report issued on Friday.
Lam’s remarks came after Ralink announced on Thursday a merger with broadband connectivity chipset maker TrendChip Technologies Corp (誠致科技) via a share swap deal. The company also unveiled a plan to raise NT$960 million (US$30.15 million) via a private placement. It said it planned to issue 10 million shares at NT$96 each to fund future operations, without providing further details.
Lam said the NT$5.3 billion merger deal would help Ralink broaden its product portfolio to compete with rivals who already offer integrated broadband solutions, although it might not create as much synergy as expected until next year, he added.
Ralink’s 802.11n chipsets are used in a variety of products across all major Wi-Fi market segments, including PCs, broadband gateways, digital TV and other consumer electronics devices. The Hsinchu-based company competes with Broadcom, Atheros Communications Inc, Intel Corp and Marvell Technology Group Ltd in this line of business.
Also headquartered in Hsinchu but focused on ADSL chipsets and software, TrendChip competes with Broadcom, Lantiq (formerly a wireline communication division of Infineon Technologies AG) and Ikanos Communications Inc.
Under the terms of the deal, Ralink would exchange one of its shares for 0.8209 of a TrendChip share and would be the surviving entity once the merger is completed on Oct. 1.
The deal, which is still subject to shareholder approval at both companies, will create a new corporate entity with capital of NT$1.63 billion and a market value of approximately NT$20 billion. Based on last year’s figures, the new Ralink would have combined revenues of NT$7.32 billion.
To catch up with strong local rival Realtek Semiconductor Corp (瑞昱半導體), the new company may bid for another local company, IC Plus Corp (九暘電子).
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