China's AsiaInfo Holdings and Linkage Technologies have signed a definitive agreement to merge, forming a company worth US$1.8 billion and having over 8,000 employees.

Under the terms of the agreement, Linkage shareholders will receive US$60 million in cash and approximately 26.8 million AsiaInfo shares. 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.

"We are creating the pre-eminent software solutions provider in China's telecommunications industry," said Mr. Steve Zhang, AsiaInfo's president and chief executive officer. "The combined company's expanded service offering, extensive base of highly skilled engineers, world class R&D capabilities and complementary customer bases will enable us to better service and anticipate our customers' needs. Going forward, we will leverage our products and services which range from system implementation and maintenance services to high-value consulting in order to capitalize on China's fast-growing telecom software industry. In addition to growing our business domestically, the merged company will explore new revenue drivers by looking abroad."

Upon closing, Mr. Steve Zhang, AsiaInfo's president and chief executive officer, will become president and chief executive officer of AsiaInfo-Linkage. AsiaInfo-Linkage's board of directors will comprise of nine members, consisting of six members from AsiaInfo's board and three members appointed by Linkage's board. Mr. Libin Sun, Linkage's chairman and chief executive officer, will serve as AsiaInfo-Linkage's executive co-chairman and Mr. James Ding, AsiaInfo's chairman, will serve as AsiaInfo-Linkage's co-chairman.

The merger has been approved by both companies' boards of directors and is subject to customary closing conditions including the receipt of any regulatory approvals and the approval of AsiaInfo's shareholders. The transaction is expected to close by the end of the first quarter or early in the second quarter of 2010.