Flextronics International Ltd has struck a deal to acquire fellow contract manufacturing and design company The Dii Group Inc in a stock swap valued at $2.4bn. Terms of the agreement call for San Jose-based Flextronics to pay 0.805 shares of common stock, valued at $65.41 based on Friday’s closing price, for each Dii share, representing a 26.2% premium over Dii’s Friday close. After closing, which is expected in April, Dii shareholders will own approximately 34% of the combined company.
Flextronics said the acquisition, which it claims to be the largest in the history of the electronics manufacturing services industry, will allow it to expand its printed circuit board operations and design services while adding 22 locations around the globe and an unspecified number of customers. Flextronics will also add about 12,000 employees and more than 2.9 million square feet of manufacturing and design facilities.
The combined company will be the fourth-largest provider of electronics manufacturing services worldwide – behind Solectron Corp, SCI Systems Inc and Celestica Inc – with revenue over the trailing 12 months of $3.8bn and projections of $6bn in sales by next year. The new entity will operate under the Flextronics name and claims strength in the areas of telecommunications, consumer electronics and PCB fabrication.
In the near term, the deal is expected to be immediately accretive to Flextronics’ earnings by at least a few cents per quarter, excluding the effects of one-time charges related to the acquisition. Following the announcement of the agreement Monday, shares of Niwot, Colorado-based Dii jumped $8.875 to close at $60.6875 while Flextronics dipped $1.6875 to close at $79.5625. รก
