California electronics manufacturer bought for $3.6 billion
Singapore-based Flextronics International Ltd., the world’s second-largest maker of electronics components, said Monday it would buy Solectron Corp., the world's fifth-largest electronics maker, for $3.6 billion.
Under terms of the deal, shareholders of Milpitas-based Solectron can choose to get 0.345 share of Flextronics or $3.89 in cash for each Solectron share. The cash offer is about 15 percent higher than Solectron’s closing price on Friday.
Singapore-based Flextronics, with annual revenue of $18.6 billion, said the deal for Solectron will boost sales to about $30 billion annually.
The deal will make Solectron a subsidiary of Flextronics, with Solectron shareholders holding a stake of 20 percent to 26 percent.
Flextronics, whose customers include Casio Computer Co., Dell Computer Corp., Eastman Kodak Co., Ericsson Telecom AB, Hewlett-Packard Co., Microsoft Corp., Motorola Inc., Nortel Networks Ltd., Sony-Ericsson and Xerox Corp., expects the deal to add at least 15 percent to its earnings.
For its part, Solectron operates in more than 20 countries and had sales from continuing operations of $10.6 billion in fiscal 2006. Its customers include Cisco Systems Inc., International Business Machines, Sun Microsystems Inc., Ericsson, Motorola, Nortel Networks and Hewlett-Packard.
The merger will cut Flextronics' costs by as much as $200 million after taxes within two years and boost earnings per share by at least 15 percent, Flextronics said. The transaction should close by the end of this year.
Solectron said in March it may eliminate as many as 1,500 jobs during a restructuring of facilities in North America and Western Europe.