Flextronics buys rival EMS player Solectron for $3.6B

By Colleen Taylor, Contributing Editor -- Electronic News, 6/4/2007

Singapore-based electronics manufacturing services (EMS) provider Flextronics International Ltd. today announced it has entered into a definitive agreement to acquire its Milpitas, Calif.-based rival Solectron Corp.

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 ordinary shares on June 1. Each share of common stock of Solectron will be converted into the right to receive, at the election of each of the individual holders of Solectron shares, either 0.3450 shares of Flextronics or a cash payment of $3.89 per share, subject to certain conditions.

Operating in 35 countries with a combined workforce of approximately 200,000 employees, including approximately 4,000 design engineers, Flextronics said the combined company's annual revenues are set to exceed $30 billion across seven customer market segments and several vertical component divisions.

"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, realize significant cost savings, and better serve the needs of our combined customers, employees and shareholders," Mike McNamara, Flextronics' CEO, said in a statement. "We will be a larger, more competitive company and therefore better positioned to deliver supply chain solutions that fulfill our customers' increasingly complex requirements.

It could take up to 24 months to fully integrate this acquisition, Flextronics said, which will eventually save the company some $200 million after-tax.