Solectron Acquired by Flextronics

Heather Thompson

August 1, 2007

2 Min Read
Solectron Acquired by Flextronics

OUTSOURCING NEWS

Solectron and Flextronics combined revenues will exceed $30 billion.

Flextronics International Ltd. and Solectron Corp. have entered into a definitive agreement for Flextronics to acquire Solectron for $30 billion. The combined company will have worldwide EMS capabilities, from design resources to end-to-end vertically integrated global supply-chain services, which will enhance its ability to design, build, and ship a complete packaged product for customers.

Operating in 35 countries with a combined workforce of about 200,000 employees, including approximately 4000 design engineers, the combined company's annual revenues will exceed $30 billion across seven customer market segments and several vertical component divisions.

Mike McNamara, CEO of Flextronics, says, “Solectron is an extremely important strategic addition to Flextronics, and this combination transforms the landscape of our industry. By joining forces, we expect the increased scale will enable us to further extend our market segment reach and leverage an increased vertical integration opportunity.”

Paul Tufano, executive vice president and interim CEO of Solectron says, “Flextronics is the best strategic partner for Solectron.”

Under the terms of the definitive agreement, unanimously approved by the boards of directors of both companies, shareholders of Solectron will receive total consideration currently valued at approximately $3.6 billion, based on the closing price of Flextronics's ordinary shares on June 1, 2007.

While Flextronics will continue to evaluate alternative long-term financing arrangements, Citigroup Global Markets Inc. has committed to provide Flextronics with a $2.5 billion, seven-year, senior unsecured-term loan to fund the cash requirements for this transaction (including the refinancing of Solectron's debt, if required). Following the acquisition, Solectron will become a wholly owned subsidiary of Flextronics, and Solectron shareholders will own approximately 20% to 26% of Flextronics's outstanding shares.

McNamara explains that Flextronics has reorganized its management structure over the last 18 months so that it can create the infrastructure required to effectively and efficiently scale up operations.


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