US-based private equity firm Kohlberg Kravis Roberts will buy Flextronics Software Systems, the software arm of Flextronics International Ltd with operations located predominantly in India, for $900 million.
The acquisition is KKR's first investment in India and second investment in Asia, following its 2005 investment in Avago Technologies, the former semiconductor products group of Agilent Technologies. It is believed to be the largest leveraged buyout and technology investment in India to date.
"We will buy 85 per cent of the FSS unit from Flextronics International Ltd, the world's largest producer of electronics for other companies," a KKR release said.
The private equity firm said it had signed a definitive agreement to acquire the software business in a deal that will see Flextronics retain a 15 per cent equity in the business, which will operate as an independent software development and solutions company.
The software business is headquartered in Palo Alto, California and in addition to operations in the US and India, it has a significant presence in Eastern Europe.
The division employs about 6,100 employees around the world. The business is unique in its ability to deliver communications solutions that stretch from the network infrastructure to end user devices.
Following completion of the transaction, CEO Ash Bhardwaj, FSS president Arun Kumar and the existing management team will continue to lead the software business.
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