'Merger Of Equals' Creates China Outsourcing Giant

By Timothy Hay from DowJones Venturewire

As China increasingly becomes a premier destination for outsourcing research and development work, three privately held companies are joining forces to offer "cradle-to-the-grave" product development services from a Beijing office and more than 20 other locations.

The Symbio Group, an outsourcing company based in Beijing and Silicon Valley, is participating in a "merger of equals" with two Finnish start-ups, software-testing company Flander Oy and software-development company Ardites Ltd., said Jacob Hsu, Symbio's chief executive.

The three-way merger involves no cash, Hsu said. All three companies are simply pooling their stock together, and the combined entity will keep the name Symbio, Hsu said.

"Everybody is doubling down to continue this company," Hsu said.

Finnish private-equity firm CapMan Capital Management is the only institutional investor involved in the deal, Hsu said, as the firm backed Flander with undisclosed investments. In 2005, CapMan took a 31% stake in Flander after a financing round, VentureWire records show.

Both Symbio and Ardites were backed by individuals and company management, Hsu said.

Vesa Wallden, the deputy head of CapMan, declined to say how large a stake his firm holds in the newly formed Symbio, which will be headquartered in Beijing. The combined company has 21 other offices worldwide, Hsu said.

Established in 1997, Flander provides software testing and application development with an emphasis on the wireless industry. It tests mobile terminals and solutions and develops wireless applications for Symbian, Java, and Linux environments, company materials said.

Ardites, founded in 2002, builds mobile software for a wide range of customers, company materials said.

Symbio is a tech-bubble survivor that was founded in 1994 by IBM Corp. veterans, Hsu said. The company has done outsourcing work for a who's-who list of prominent tech companies, including Google Inc., IBM, Nokia Corp. and EBay Inc., Hsu said.

He declined to give information about revenues, profitability or valuation.

The combined company will have 1,400 employees, Hsu said, and will be a dominant player in the outsourcing business.

"We are creating the world's number one product development platform," Hsu said.