Gigabyte To Establish A Joint Venture With ASUSTeK
Gigabyte Technology on November 7 announced that it will transfer its existing own-brand desktop PC motherboard and graphics cards business, valued at NT$4.08 billion (US$124 million), to Gigabyte United Incorporated, a joint venture it will establish with Asustek Computer in January of 2007.
Gigabyte's shareholders on November 7 approved the deal, which was approved earlier by the company's board of directors. Gigabyte and Asustek signed a strategic-alliance agreement for the joint venture on August 8 of this year, according to Gigabyte chairman Dandy Yeh. Gigabyte United will have an initial capital of NT$8.0 billion, with Gigabyte and Asustek holding a 51% and 49% stake, respectively, Yeh indicated. Yeh will assume the chairmanship of the new joint venture.
Gigabyte Technology will transfer its existing assets, liabilities, orders and clients, intangible assets and legal relations/status, worth an appraised total value of NT$4.08 billion, to Gigabyte United, Yeh pointed out. The transaction accounts for 14.03% of Gigabyte Technology's total asset value and 149.91% of its net fixed asset value, Yeh added.
Gigabyte United will have permanent and exclusive licensed use of the Gigabyte brand and trademark for making and marketing desktop motherboards and graphics cards. Gigabyte Technology will charge for the licensed use of its brand name for five years from the first year Gigabyte United begins to make a profit. Gigabyte United will pay 50% of its operating profit to Gigabyte for three years with the percentage to decrease to 33% for the following two years, according to Gigabyte Technology.
The strategic alliance with Asustek will avoid competition between the two companies and will integrate the resources of each for better competitiveness, Yeh explained. Gigabyte Technology will maintain its existing ODM production of desktop motherboards and graphics cards, Yeh pointed out.
Source: The DigiTimes
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