Case II        Subsidiary Forward Merger: Acquisition of Philips Semiconductor CDMA reference design group by Holley Communications Group   

The decision to establish  CDMA networks partially replacing current GSM system by Chinese Ministry of Information Industry (MII)  makes a big impact on Chinese mobile phone manufacturing industry . Whoever has the key CDMA technology  has won the preferences. 

Due to the complexity of CDMA technology ,  there are only  few companies that  have successfully developed  chipset  key part of CDMA mobile phone at the end of 2001 Philips Semiconductor, Inc .is one of the few that master this technology when some mobile phone giants are still unable to enter CDMA chipsets business successfully. This is also the technology that China’s mobile phone manufacturers are eager to obtain and have no way to break through.

Because of global economics slowdown, Philips Semiconductor Inc. planed to restructure its businesses and decided to sell its CDMA reference design group. Alliance PKU captured such important information  through its US subsidiary in Silicon Valley of California, and sensed sharply that this might be a great opportunity for China’s enterprises. Therefore they immediately recommended the project to Holley Group – one of their long-term clients. Holley Group  also confirmed this shortcut and good opportunity to control  and to develop CDMA  technology, and decided to fully trust Alliance PKU to proceed the acquisition of Philips CDMA reference design group. 

Through over two months of intensive negotiation, Holley Group, with full assistance of Alliance PKU and its cooperative agencies, successfully acquired Philips Semiconductor CDMA reference design group with the extremely favorable terms . 

This successful acquisition has its profound impacts:

1.              It is the first time in China communication history that a China Mobile Phone
Manufacturer has a control of  key technology of CDMA  chipsets . This changes
the competitive landscape of mobile phone handsets .With this acquisition, Holley Group becomes one of the leading suppliers of CDMA chipsets to China ,biggest CDMA communication market in the world. 

2.              It is the first time for Chinese enterprise (especially private enterprise) to successfully acquire technological subsidiary of famous international company.  

3.    The scale of the acquisition with value of  USD 180million,complexity of procedure and short period of time make a milestone at china M&A history.

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