WBL Corp is merging its mainboard-listed unit, MFS Technology, with a Nasdaq-listed subsidiary in a move to create the world's second-biggest maker of flexible printed circuit boards.

WBL said yesterday that it will inject its entire 55.7 per cent stake in MFS into California-based Multi-Fineline Electronix. MFS will be delisted from the Singapore Exchange if the US company gains full ownership.

Multi-Fineline, which is 55.8 per cent owned by WBL, is offering to buy all of MFS' stock for as much as $1.20 apiece. Both firms make similar components used in mobile devices such as phones, PDAs and portable barcode scanners.

The merger is expected to yield cost savings from increased scale as well as greater customer diversification.

The price will depend on how well the offer, which is conditional on Multi-Fineline getting at least 64 per cent of MFS shares, is accepted. If the offer is taken up by at least 90 per cent of MFS' minority shareholders, they can receive $1.20 per share, a five-cent premium over the stock's closing price on Wednesday of $1.15. Trading was halted yesterday for the offer announcement but will resume today.

But if the acceptance level falls below 90 per cent, Multi-Fineline will pay $1.15 per share.

In either case, MFS shareholders can alternatively opt to exchange each MFS share owned for 0.0145 of a new share in Multi-Fineline. Based on the American counter's closing price of US$63.82 on Tuesday, this option values MFS shares at about $1.50 apiece.

WBL will exchange its MFS shares for new Multi-Fineline shares. This will raise its interest in the American firm to as much as 63.7 per cent, if all minority shareholders opt for cash.

"We believe accepting the Multi-Fineline offer will be an all-win situation for Multi-Fineline, MFS and WBL," said WBL chief executive Tan Choon Seng.

"We nurtured the two companies in their infancy...and are pleased that they will now have the opportunity to join forces and become a truly leading global