Flextronics in U.S. Deal

Flextronics International will buy Solectron for about $3.6 billion, the two companies said Monday, in a move by Flextronics to catch up with Hon Hai Precision Industry, the world’s biggest manufacturer of electronics for other companies. The purchase will give Flextronics, which is based in Singapore, contracts with Cisco Systems and International Business Machines. Flextronics, which makes the Xbox 360 game console for Microsoft, is second only to Hon Hai, a Taiwan company, in sales.

The deal “adds a couple of good customer relationships in Cisco and IBM,” said Louis Miscioscia, an analyst for Cowen & Co., based in New York. “It also gives them the opportunity to do an accretive deal and gives them more size and scale, which allows them to make more efficient use of their facilities.” Solectron is based in Milpitas, California.

The combination will reduce costs by as much as $200 million after taxes in the 18 to 24 months after the deal is completed, and raise earnings per share by at least 15 percent, Flextronics said.

The combined company will have more than $30 billion in annual sales and about 200,000 employees, Flextronics said.

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