Esmertec, a Swiss firm specializing in Android and Java virtual machines, is acquiring Purple Labs, French vendor of mobile stacks compatible with the LiMo Platform.

In a stock deal worth about 19.7 million shares, the two European companies will be renamed as Myriad Group AG.

The new Myriad Group would combine two major platforms and development teams for mobile Linux with combined, estimated 2009 revenue of about $125 million, and about 800 software engineers in Europe, Asia, and America. While linking Android and LiMo development teams, Myriad also integrates Esmertec's more fundamental Java middleware technology with Purple Labs's mobile browsers and UI components.

Esmertec was a founding member of the Open Handset Alliance (OHA), which oversees the Google-sponsored, Linux/Java Android stack. The company also joined the LiMo Foundation in August as one of the refugees from the now defunct Linux Phone Standards (LiPS) Forum.

In the Myriad stock deal, Esmertec is purchasing all of Purple Labs's stock shares in exchange for 19,681,842 Esmertec shares, say the companies. Subject to shareholder approval, the acquisition also includes an earn-out clause that would provide Purple Labs shareholders with an additional 4.4 million Esmertec shares if specified targets are met. Meanwhile, a Purple Labs management options scheme is being converted to about 1.4 million Esmertec options, which could grow by over 300K, contingent on the earn-out, say the firms.

Once the companies are fully integrated in 2010, the merger is expected to yield annual operating cost savings of about $13 million.

Purple Labs CEO Simon Wilkinson will become CEO of Myriad, and Esmertec CEO Thomas Hornung, will move to an advisor role, say the companies. Esmertec chairman Hans Peter Baumgartner and other Esmertec board members will retain their positions in Myriad, and subject to shareholder approval, Purple Labs's Wilkinson, Roland Manger, and Loek van den Boog will join the board of directors of Myriad.

The acquisition has been approved by the boards from both companies, and was "reviewed favorably" by the Swiss Takeover Board, say the firms. Shareholder approval is expected by the end of March.