BusinessCompany NewsParthus waiting for US

Parthus waiting for US

It has been a busy first quarter for Parthus Technology's chief financial officer Elaine Coughlan. Not only has she had to prepare Parthus' first-quarter results that are coming out a week ahead of schedule, but she's also been finalising the proposed merger of her company with the IP licensing business of US-Israeli company DSP Group.

Now, Coughlan is eagerly awaiting a tax ruling from the US and approval from remaining shareholders for the proposed merger. After the merger, she will continue to head the finance team of the new hybrid ParthusCeva.

A Parthus spokesman explained DSP and the chip maker were awaiting a ruling from the US Internal Revenue Service that would allow the merger to be tax free. The US company had previously applied for tax-free status of its Ceva spin-off, but now it will merge with Parthus, DSP has to reapply.

Although the companies are still unsure of the merger’s status, the spokesman said Parthus was confident the deal would be tax free.

Parthus has already obtained approval from 36% of its shareholders for the merger, which will take place under Irish takeover rules. Under the terms of the deal, DSP will spin off Ceva, distributing the company’s shares to existing DSP shareholders.

Following the spin-off, Ceva will issue common stock to Parthus shareholders.

As a result, DSP shareholders will hold 50.1% of ParthusCeva common stock and Parthus shareholders 49.9% of the new company. As capital repayment, £42m will be distributed to Parthus shareholders.

It still remains unclear which firm will audit ParthusCeva’s accounts.

At the moment, and until the deal is completed, Parthus is using KPMG while Ernst & Young audits DSP’s accounts. The new company could opt for a shared audit, pick one of the two auditors or choose another auditor.

The merged company’s estimated annual revenues will be $66.1m (£45.6m) increasing from Parthus’ $40.9m (£28.3m) reported for the year to December 31, 2001. According to Coughlan, the combined group expects revenues of $80m (£55.3m) by 2003 sales growth of 20%.

ParthusCeva will remain listed on the LSE and Nasdaq, reporting its accounts under US GAAP.

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