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Flextronics Reaches Agreement in Principle to Merge Flextronics Network Services

Posted on: Thursday, 12 May 2005, 21:00 CDT

SINGAPORE, May 12 /PRNewswire-FirstCall/ -- Flextronics announced today it has an agreement in principle ("Agreement") to merge Flextronics Network Services (FNS), a wholly-owned Flextronics subsidiary, with Telavie AS, a company wholly-owned by Altor, a private equity firm focusing on investments in the Nordic region. Under the terms of the proposed merger, Flextronics would receive an undisclosed cash payment plus additional contingent payments along with a 30% ownership stake in the merged company.

The Agreement would combine FNS, a global network services provider with revenues of approximately US$770 million, with Telavie, a leading Scandinavian network services group with revenues of approximately US$230 million. Together the merged company would employ almost 10,000 people throughout 18 countries with total revenues of approximately US$ 1 billion. The merged company would be the independent leader in global network and telecom services with a competitive multivendor competence. By combining, the merged company would enhance its ability to win a broader level of service and maintenance contracts in all markets, while building a long-term sustainable and profitable business that spans beyond the Nordic region.

"This merger would advance Flextronics's strategy of increasing its focus and resources on the core design and vertically integrated manufacturing and logistics services that best serve our customers," said Michael E. Marks, Chief Executive Officer of Flextronics. "With the strength of its management team, broad experience and excellent track record of managing similar investments, we believe Altor would serve as an excellent majority shareholder for our Network Services operation. In addition, the employees and customers of Flextronics Network Services will be provided better opportunities and service capabilities by being part of the independent leader in global network and telecom services."

"We believe there is substantial potential for profitable growth in the network services sector, and the merged entity would be very well positioned to be the global leader in this field," said Harald Mix, CEO of Altor.

"This combination would be an excellent strategic fit for all parties involved," said Ronny Nilsson, President of Flextronics Network Services. "By partnering with Telavie, the leader in telecom-related infrastructure services in Norway, we would be able to strengthen our global, independent position, broaden our portfolio of on site network services and build upon our overall multivendor expertise in the global market."

The proposed merger is subject to the finalization of definitive agreement terms and conditions and consultation with Flextronics Network Services's Swedish Unions. Closing of the proposed merger will also be subject to obtaining certain governmental approvals as well as other customary closing conditions.

About Flextronics

Headquartered in Singapore (Singapore Reg. No. 199002645H), Flextronics is a leading Electronics Manufacturing Services (EMS) provider focused on delivering innovative design and manufacturing services to technology companies. With fiscal year 2005 revenues of USD$15.9 billion, Flextronics is a major global operating company that helps customers design, build, ship, and service electronics products through a network of facilities in 32 countries on five continents. This global presence provides customers with complete design, engineering, and manufacturing resources that are vertically integrated with component capabilities to optimize their operations by lowering their costs and reducing their time to market. For more information, please visit http://www.flextronics.com/.

About Flextronics Network Services

Flextronics Network Services, a business unit of Flextronics, is a global independent leader in multivendor network services. With a broad range of onsite network and field services for fixed and mobile operators and systems vendors, Flextronics Network Services builds, installs and maintains data- and telecom networks for many of the world's largest operators, equipment vendors, and enterprise customers. Flextronics Network Services has established a leading position in the global marketplace as a valued supplier of IT and communication technologies, as well as advanced 3G services. For more information, please visit http://www.flextronicsnetworkservices.com/.

About Telavie

Telavie, formerly known as Bravida Telecom, is the leading provider of telecom-related infrastructure services in Norway, with approximately 2,000 employees and 2004 revenues of US$230 million (NOK 1.4 billion). Historically the company was an in-house unit of Telenor and later a part of Bravida. Altor acquired the company in December 2004 and has recently expanded the operation to Denmark through an add-on acquisition. As the leading Norwegian construction, installation and maintenance company within telecom and broadband, Telavie's independence, and complete national coverage position it well to develop further services and capture additional business from existing as well as new customers. For more information, please visit http://www.telavie.com/.

About Altor

The Altor 2003 Fund, with Altor Equity Partners AB as its investment adviser, is a Nordic private equity fund with EUR 650 million in commitments. Altor focuses on control investments in Nordic-based companies in which Altor can generate long-term value through expansion and fundamental improvements. Altor works with dedicated teams on investments in Denmark, Norway, Sweden and Finland. Investors in the Altor 2003 Fund consist of leading institutions such as Goldman Sachs Private Equity Group, the university endowment funds at Harvard, Princeton and Yale as well as the George and Betty Moore Foundation. For more information, please visit http://www.altor.com/.

This press release contains forward-looking statements within the meaning of federal securities laws. These forward-looking statements include statements relating to the possibility of the divestiture of Flextronics Network Services, a wholly-owned subsidiary of Flextronics. These forward- looking statements involve risks and uncertainties that could cause the actual results to differ materially from those anticipated by these forward-looking statements. These risks include the challenges of effectively managing our operations; the risk that we may not be able to consummate the divestiture on terms favorable to us, or at all; our ability to respond to changes in economic trends; and the other risks described under "Business - Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our most recent Annual Report on Form 10-K and in our quarterly reports on Form 10-Q and current reports on Form 8-K, filed with the SEC. The forward-looking statements in this press release are based on current expectations and Flextronics assumes no obligation to update these forward-looking statements.

Flextronics

CONTACT: Thomas J. Smach, Chief Financial Officer, +1-408-576-7722, orinvestor_relations@flextronics.com, or Renee Brotherton, Senior Director ofCorporate Marketing, +1-408-576-7189, or renee.brotherton@flextronics.com,both of Flextronics

Web site: http://www.telavie.com/

Web site: http://www.flextronics.com/

Source: PRNewswire-FirstCall

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