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India
Telecom
June 11, 2004
Flextronics to acquire 55 percent of HSS
SINGAPORE
AND NEW DELHI -- Flextronics, The DIRECTV Group Inc.,
and Hughes Network Systems Inc. (a wholly-owned subsidiary
of DIRECTV) recently announced that they have signed
an agreement whereby Flextronics will acquire Hughes
Network Systems' entire ownership stake of 55 percent
in Hughes Software Systems (HSS), a leading provider
of software products and services to telecom infrastructure
companies.
HSS' shares trade in India on the Bombay Stock Exchange
and the National Stock Exchange. Some of its customers
include many of the world's largest telecom companies.
HSS reported revenue of Rs. 3,604 million (approximately
US$ 80 million) and net income of Rs. 769 million (approximately
US$17 million) in its fiscal year ended 31 March 2004.
Revenues grew approximately 63 percent in fiscal 2004
and are likely to grow approximately 25 percent in fiscal
2005.
HSS provides convergent software solutions for fixed
and mobile networks for both voice and data. Its products
and services span a variety of domains, such as optical
networks, wireless networks, satellite networks, switching
systems, convergent networks and broadband networks.
HSS' product portfolio includes protocol stacks and
value-added frameworks and are comprised of licensable
technologies focused on Voice over Packets (VoP), SS7,
broadband and wireless (GPRS/UMTS) products that provide
customers with open architecture solutions.
This innovative combination of products and services
offered by Flextronics and HSS will provide a complete
outsourcing solution to telecom Original Equipment Manufacturers
(OEMs). A telecom product can require the following
end-to-end supply chain outsourcing services during
its development life cycle:
Engineering services: includes industrial and mechanical
design, hardware design, embedded and application software
development, semiconductor design, PCB design, optical
design, tooling design, electronic system design, system
validation, and test development.
System assembly and manufacturing: manufacturing services
includes PCB assembly (PCBA), full systems assembly
and integration, fabrication and assembly of plastic
and metal enclosures, fabrication of PCBs and backplanes
and the fabrication and assembly of photonics components.
Logistics services: includes freight forwarding, warehousing/inventory
management and outbound/e-commerce solutions to move
products through a global supply chain network.
After-market services: includes repair and warranty
services as well as network and communications installation
and maintenance.
By partnering with HSS, the premier telecom software
company in India, Flextronics is the first EMS provider
to offer embedded and application software development
for telecom infrastructure products and customers. Flextronics
can now provide a complete outsourcing solution to telecom
OEMs.
Michael E. Marks, chief executive officer of Flextronics,
said: "This partnership should offer significant
opportunities to cross-sell our respective products
and services to a very complimentary telecom customer
base. We are committed to expanding design services
into every product area where we have a manufacturing
presence. HSS will enable us to move quickly into the
telecom infrastructure space. We are thrilled to have
this opportunity."
Arun Kumar, president and managing director of HSS,
added: "We are very excited about the prospect
of creating more value for our customers. We believe
by teaming with Flextronics, HSS will be better positioned
to enhance our offerings. The transaction will also
present our employees with opportunities for growth
on a more global scale."
Flextronics will pay Rs. 547 per share, with total cash
consideration paid to Hughes Networks Systems of approximately
US$ 226 million. Subject to regulatory approval, the
transaction is expected to close no later than October
2004. Pursuant to Indian securities regulations, Flextronics
is required to make an open offer on or about June 11,
2004 to purchase an additional 20 percent of the shares
outstanding from the remaining shareholders at a price
no less than Rs. 547. There is no obligation for shareholders
to accept this open offer and there is no assurance
that any shares will be offered for sale to Flextronics.
The approximate total purchase price of US$ 226 million
to be paid to Hughes Network Systems, along with the
open offer of US$ 82 million, assuming an offer price
of Rs. 547, is required to be funded by Flextronics
on the date the open offer is initiated.
Contact:
Flextronics
www.flextronics.com
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