Flextronics has announced that it has signed an agreement to acquire Microcell Group, a leading original design manufacturer ("ODM") of wireless Global System for Mobile Communications ("GSM"), General Packet Radio Service ("GPRS"), and Enhanced Data Rates for Global Systems for Mobile Communications Evolution ("EDGE") handset products. Microcell`s operations include product creation centers in Finland and Denmark, administrative offices in Switzerland and USA, and a manufacturing operation through a joint venture in Nanjing, China.
The agreement provides for an initial cash purchase price to the shareholders of Microcell of approximately $80 million, plus the assumption of approximately $120 million of net liabilities. The purchase price is subject to adjustments for contingent consideration, based upon the acquired business achieving specified levels of earnings through December 2005. Microcell shareholders may, under certain circumstances, elect to receive a portion of the purchase price and contingent consideration in Flextronics shares rather than cash.
The acquisition will strengthen Flextronics` mobile phone ODM capabilities by adding Microcell`s competence in the GSM / GPRS / EDGE field. Microcell is especially strong in the product creation area with over 300 product creation engineers that have proven track record of providing mobile phone solutions to leading OEMs
"We are pleased to become a part of Flextronics` world-class organization," said Anders Torstensson, Chief Executive Officer of Microcell. "We have worked hard to become a leading ODM company in the mobile phone sector, and by teaming with Flextronics, we will be better positioned together to offer existing and potential customers a complete service offering."
"In addition to increasing capabilities for our telecom OEM customers, this acquisition will bolster Flextronics` ODM initiative in the areas of GSM, GPRS and EDGE mobile phone technologies," said Michael E. Marks, Chief Executive Officer of Flextronics. "The two companies have had a close working relationship for the past few years during which Flextronics has been a major supplier to Microcell. This long-standing relationship gave us unique insight into their management team, customer relationship and technical capabilities while we evaluated this potential combination."
"I`m proud that Flextronics has chosen to make this investment in Microcell and that we will play such an important role in their ODM business efforts," says Jyrki Halikainen, Chairman of the Microcell Group. "This is foremost a recognition of our employees, know-how and skills."
The acquisition is expected to close in October and is subject to a number of customary conditions, including regulatory approvals and approval by the shareholders of Microcell.
The acquisition is not expected to have a significant impact on sales and is expected to have a neutral to slightly positive effect on the operating profits of Flextronics from the acquisition closing date through its fiscal year ending March 31, 2004. For the subsequent fiscal year it is expected to be additive to operating profits.
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Headquartered in Singapore, Flextronics is the leading Electronics Manufacturing Services (EMS) provider focused on delivering supply chain services to technology companies. Flextronics provides design, engineering, manufacturing, and logistics operations in 29 countries and five continents. This global presence allows for supply chain excellence through a network of facilities situated in key markets and geographies that provide customers with the resources, technology, and capacity to optimize their operations. Flextronics` ability to provide end-to-end services that include innovative product design, test solutions, manufacturing, IT expertise, network services, and logistics has established the Company as the leading EMS provider with revenues of $13.4 billion in its fiscal year ended March 31, 2003. For more information, please visit www.flextronics.com
Microcell
Microcell designs, develops and produces mobile communication devices. Microcell`s first-class technological ability to produce its own solutions enables it to act as a global partner to the largest Original Equipment Manufacturers ("OEMs"). For more information, please visit www.microcell.fi.
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