SMT, PCB Electronics Industry News

Silver Lake Invests in Flextronics

Mar 05, 2003

Flextronics International Ltd. said Monday, March 3, that private equity firm Silver Lake Partners has invested $200 million in the electronics contract manufacturer.

Terms call for Menlo Park, Calif.-based Silver Lake to purchase a $200 million zero coupon convertible junior subordinated note maturing in 2008 and convertible at $10.50 per share. Flextronics has the option of calling the note, payable in cash or stock, after three years, but Silver Lake lacks a put option prior to maturity.

Jim Davidson, a founder of Silver Lake, said the firm initiated the deal with Singapore-based Flextronics.

"In the last 12 years, Flextronics has outperformed its peers in both attractive and difficult markets," he said. "We think Flextronics has one of the best franchise management teams in the electronics manufacturing sector."

Davidson, who will take a seat on Flextronics' board, said several Silver Lake partners have personally invested in electronics manufacturing companies for 12 to 15 years, and the consensus at the firm is the sector offers promising returns.

Neither Flextronics nor Silver Lake used outside advisers on the deal.

Although Flextronics has struggled in recent quarters, it has fared better than competitors such as Celestica Inc. of Toronto and Solectron Corp. of Milpitas, Calif., and its share price remains undervalued, analysts said.

Flextronics reported a net loss of $6.5 million for its fiscal third quarter on revenues of $3.9 billion, a 15% top-line increase from the prior quarter. It reported $614 million. By contrast, in its most recent fiscal quarter Celestica lost $435 million on revenue of $1.9 billion.

"Flextronics is a great company and Silver Lake wanted in," said Alexander M. Blanton, senior director with New York investment adviser Ingalls & Snyder LLC, which owns shares in Flextronics.

Blanton noted that Flextronics is the only large electronics manufacturer to have maintained flat to modestly growing revenues throughout the technology downturn. Although Flextronics' margins have deteriorated, sales of rivals such as Solectron and Sanmina-SCI Corp. of San Jose, Calif., have plunged as corporate customers slashed orders.

Still, Flextronics has not escaped the high-tech downturn unscathed. In addition to dips in revenue, the company has laid off employees and shuttered facilities, including printed circuit board manufacturing sites in California and Sweden that it was unable to sell.

Flextronics shares were up 1.6% in afternoon trading Monday to $8.82. The company traded at $35 to $40 per share in the early months of 2001, just after the collapse of telecom stocks.

Flextronics did not return a call seeking comment.

The deal with Silver Lake gives Flextronics extra cash to acquire inventory and facilities, which contract manufacturers purchase in fulfilling orders, as well as additional customers, said James Savage, a partner with Thomas Weisel Partners LLC of San Francisco.

"Silver Lake's got a lot of contacts among hardware makers, and this relationship will smooth some matters over for both companies."

Silver Lake's investment in Flextronics is its first in the contract electronics manufacturing sector. Formed in 1999, the firm's most notable deal was its November 2000 leveraged buyout of Seagate Technologies Inc. for $2.05 billion, the biggest technology LBO ever. Silver Lake took the maker of hard disk drives private in November 2000 before backing the company's IPO about a year later.

Seagate, based in the Cayman Islands, now has a market capitalization of about $4 billion.

Among Silver Lake's portfolio companies are Ameritrade Holding Corp. of Omaha; Enterasys Networks Inc. of Rochester, N.H.; and Riverstone Networks Inc. of Santa Clara, Calif.

www.TheDeal.com

The Deal.com Charting the Deal Economy. Definitive information for the M&A, VC, Private Equity and IPO community

�Copyright 2003, The Deal, LLC. All Rights Reserved.

Jun 25, 2010 -

Petra Solar Enters into Supplier Agreement with Flextronics to Facilitate Expansion into Global Markets

Mar 17, 2003 -

Newly Formed Company Agrees to Rehire Flextronics Workers in Italy

Feb 26, 2003 -

Flextronics' CTO to present keynote at PCB Design Conference West/HDI Expo (Mar 10-14)

Feb 12, 2003 -

Flextronics Named Logistics Supplier for Xerox Operations in Brazil

Jan 24, 2003 -

Flextronics Beats Street, Sets Q3 Sales Record

May 07, 2002 -

Flextronics Photonics Partners with Datasweep

Apr 30, 2002 -

Flextronics Undervalued if Manufacturing Increases

Apr 22, 2002 -

Flextronics Results Could Disappoint -Analysts

Apr 10, 2002 -

Flextronics Builds Flexible Product Base

Mar 18, 2002 -

Flextronics cuts back optical component operations

12 more news from Flex (Flextronics International) »

Oct 21, 2021 -

Magnalytix to Launch Series of Educational Videos in New Social Media Campaign

Oct 21, 2021 -

BTU Named Best Emerging Exhibit of the Year 2021 for New Selective Wave Soldering System

Oct 21, 2021 -

Celebrate Women's Diversity at the SMTAI 2021 Women's Leadership Program

Oct 19, 2021 -

XJTAG Ultra-Fast Flash Programmer

Oct 18, 2021 -

Summit Interconnect Earns IPC-1791, Qualified Manufacturers Listing (QML) as Trusted Electronics Fabricator

Oct 18, 2021 -

Join KYZEN in Person at SMTA International to Find the Right Solution for Any Process

Oct 18, 2021 -

CiRCLE Engineers Purchases Hentec/RPS 1325 Odyssey Lead Tinning System for Israel Facility

Oct 17, 2021 -

Transition Automation to Exhibit at SMTA Austin Expo and Tech Forum on October 19th

Oct 17, 2021 -

Southwest Systems Technology to Demo Thermaltronics Robotic Soldering Systems at the SMTA Austin Expo

Oct 17, 2021 -

XDry to Discuss Humidity Controlled Storage Cabinets at SMTA Austin Expo

See electronics manufacturing industry news »

Silver Lake Invests in Flextronics news release has been viewed 534 times

Digital Inspection Equipment

Facility Closure