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FTC approves MediaTek's plan to merge with MStar

2012/08/01 20:05:40

Taipei, Aug. 1 (CNA) The Fair Trade Commission (FTC) said Wednesday it has approved a plan submitted by integrated circuit designer MediaTek Inc. to merge with a smaller local rival MStar Semiconductor Inc.

In a statement, the FTC said the merger is unlikely to hamper market competition as there are many international rivals competing in the business and chip buyers still have options in the market.

In the highly competitive market, it would not be easy for the merged company to collaborate with its counterparts to manipulate product prices or abuse their market strength, the FTC said.

After the merger, MediaTek will continue to exist but MStar will be dissolved, according to the FTC. It will be a horizontal merger as both companies are engaged in the development of chips used in cell phones and TVs, the commission said.

In June, MediaTek announced that it will acquire a 40-48 percent stake in MStar in a tender offer between June 25 and Aug. 13 after months of intensive negotiations.

Under the deal, MStar's shareholders will get a 0.794 MedeiTek share and NT$1 (US$0.03) in cash for every MStar share they hold. The market has valued the acquisition deal at about NT$114 billion.

After concluding the tender offer, MediaTek will kick off the next stage of acquisition of MStar, aiming to complete the merger in early 2013, which will create the world's fourth largest IC designer.

The FTC said the threshold for new participants to enter the IC design business is not high, which allows newcomers to compete in the market. Therefore, the MediaTek- MStar merger is unlikely to undermine market competition, the commission said.

The merger is expected to raise Taiwan's competitive edge in the global IC industry, delivering benefits to the local economy, according to the FTC.

On the Taiwan Stock Exchange, shares of MediaTek closed up 7 percent, the maximum daily increase, at NT$272.50 Wednesday after the IC designer raised its smartphone chip shipment forecast for 2012 from 75 million units to 90 million units.

(By Wu Ching-chun and Frances Huang)
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