Asia2B and Singapore-based Sesami.com are to merge and expand into three new markets, setting the stage for consolidation in the fledgling business-to-business Internet sector. The companies have signed an agreement to form Sesami Inc with investors of each business having equal shareholdings. The new company would have a combined paid-up capital of US$72 million and cash of more than US$42 million, said co-chief executive Fang Fang, who was formerly chief executive of Asia2B. 'We are confident the merger will accelerate revenue growth,' he said. 'We are expecting to break-even by mid-2002.' Co-chief executive Poh Mui Hoon, former managing director of Sesami.com, said the merger was one of equal shareholding because they were contributing similar capital of about US$35 million. This was despite Asia2B having only six months of operating history, compared with 16 months at Sesami.com, she said, adding Sesami.com accounted for the majority of monthly transactions of US$320 million of the combined entity. Both help companies build online trading platforms, using technology of United States-based Commerce One. Ms Poh said the merger would pose 'a lot of challenges' but added she was confident comparable business culture and directions of the two firms would pave the way for a smooth integration. The merged entity will have to co-ordinate the interests of Asia2B's eight corporate shareholders - including six Hong Kong blue-chip groups - as well as those of Sesami.com's three corporate shareholders. The new entity will have a combined staff of 120 in Beijing, Hong Kong, Bombay and Singapore. No lay-offs have been planned. Lee Hsien Yang, chief executive of Singapore Telecommunications which has a 89 per cent stake in Sesami.com and a 44.5 per cent controlling stake in the new entity, said consolidation was 'an inevitable development in the industry'. Thomas Tsao, director of the new company and former chairman of Asia2B, said the combined entity had no plans to go public in the short term. 'Our financial conditions are very strong and there is no need for additional fund-raising, but we are open to strategic investment,' he said. Industry consolidation was 'definitely coming' which would see companies engage in 'a game of musical chairs'. Analysts said the merger would allow the two companies to weather difficult market conditions as growth of online transactions had been slower than previously predicted.