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Telecommunications Flextronics to buy rival electronics maker Solectron
Telecommunications Flextronics to buy rival electronics maker Solectron | Flextronics to buy rival electronics maker Solectron |
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| by Stuart Corner | |
| Tuesday, 05 June 2007 | |
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Flextronics manufactures cellular handsets for several of the major vendors. Solectron, meanwhile is struggling: it lost its CEO to Dell in February and is undergoing restructuring and cutting jobs. There have been reports of an excess of capacity in original device manufacturing (ODM) market. Flextronics CEO, Mike McNamara, said: "Solectron is an extremely important strategic addition to Flextronics and this combination transforms the landscape of our industry...Solectron's strength in the high-end computing and telecom segments will be an invaluable addition to Flextronics' existing capabilities and the combined company will be a market leader in most product market segments. We will be a larger, more competitive company and therefore better positioned to deliver supply chain solutions that fulfil our customers' increasingly complex requirements." According to Flextronics, the transaction will provide Solectron's customers with an enhanced portfolio of design and vertically integrated capabilities, greater scale, and expanded supply chain leverage along with the advantages of an increased low cost global footprint." Citigroup Global Markets has committed to provide Flextronics with a $US2.5 billion seven-year senior unsecured term loan to fund the cash requirements for the transaction. Following closure, Solectron will become a wholly owned subsidiary of Flextronics, and Solectron shareholders will own approximately 20% to 26% of Flextronics' outstanding shares. The acquisition is expected to close by the end of calendar year 2007.{moscomment}
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