TAIPEI -- Asustek Computer will spin off its contract manufacturing business unit, Pegatron Technology, by July, in a move that immediately creates a Tier II EMS company.

The spunoff operations will be managed by Pegatron Investment Holdings Co., with 25% of shares held by Asustek and the remaining 75% going to Asustek shareholders.

The estimated value of the business assigned to Pegatron Holdings will be NT92.9 trillion ($2.8 billion) and all shareholders of the company will in total receive 75% of the equity. Asustek will reduce its capitalization an anticipated 85% based on the value of the spinoff.

The spinoff date is expected to be on July 1, the company said in a statement.

In doing so, Asustek will follow the lead of its Taiwanese rival Acer, which spun off Wistron in 2000 and BenQ in 2001. Asustek itself was founded in 1990 by four former Acer engineers.

Earlier this week, Pegatron reported sales year-over-year through November had fallen 4% to NT$419.54 billion. That translates to about $1.3 billion in sales, or $1.41 billion on an annualized basis. That would place Pegatron approximately 11th worldwide, behind Plexus and ahead of SIIX of Japan, based on preliminary 2009 revenues.

Pegatron was created in 2007, when Asustek Computer spun off its PC ODM business into a wholly-owned subsidiary (at the same time, Asustek spun off its chassis molds unit into a subsidiary named Unihan Technology). At that time, Pegatron took over the ASRock (motherboards) and AMA (lighting) units and Asustek's plant in Juarez, Mexico. The impact on its stake in bare board maker BoardTek Electronics is unclear.