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SAN JOSE, Calif. and NIWOT, Colo. - Flextronics International Ltd. and the Dii Group Inc., which had combined sales of more than $3.8 billion in the last 12 months, signed a definitive merger agreement for a tax-free, stock-for-stock merger. The combined company will operate under the Flextronics International name, and will reportedly be the fourth largest provider of electronics manufacturing services, with strengths in telecommunications, consumer electronics, printed circuit board (PCB) fabrication and design services.
The Dii Group will bring manufacturing services from 22 strategic locations in China, Southeast Asia, North and South America, and Europe to the company. As a result of the transaction, Flextronics will add more than 12,000 employees and more than 2.9 million sq. ft. of manufacturing and design facilities. Flextronics will also gain a manufacturing presence in Ireland, Germany and the Czech Republic, and will expand its PCB assembly capacity in China, Malaysia, Mexico, Austria and the United States. In addition, Dii`s facilities include advanced PCB manufacturing capabilities in California, Minnesota, Texas, Germany, China and Brazil. Finally, Flextronics will gain design and semiconductor centers in California, Arizona, India and Israel.
"The trend in outsourcing has been growing at an astounding rate. As a global, world-class [contract manufacturer (CM)], you must have the speed and flexibility to offer a comprehensive set of custom design and manufacturing services," said Michael E. Marks, chairman and chief executive officer of Flextronics. "Our strategic merger with the Dii Group will expand and strengthen our ability to provide an extensive global network of facilities and capabilities to meet our OEM customers` growing needs. Dii`s strong management team and business philosophy truly complements our core business strategies and will significantly contribute to the expansion of our position in the industry."
Ronald R. Budacz, chairman and chief executive officer of the Dii Group, commented, "We have made great strides in achieving our business initiatives. The Dii Group has a history of operational excellence, strong organic growth and a cautious yet aggressive acquisition strategy. This merger is a good strategic fit for both organizations since it allows us to offer our customers a more comprehensive network of services and capabilities. It also brings together an impressive management team that is capable of driving growth and manufacturing excellence."
The merger is subject to approval by shareholders of both companies, regulatory approvals and other customary conditions. Executives and directors of both companies have agreed to vote their shares in favor of the proposed transaction. The companies anticipate that the merger will be completed in early April 2000.