NEW YORK-Motorola Inc. and Flextronics International Ltd. signed an outsourcing agreement valued at approximately $30 billion under which Flextronics will supply and manufacture certain parts and units for Motorola’s wireless phones, two-way pagers and wireless infrastructure, the companies announced.
The deal is expected to affect about 15 percent of Motorola Communications Enterprise’s total manufacturing during the five-year period, although Motorola CE will continue to be a full-line manufacturer, Motorola said.
Motorola also said it will buy an equity instrument in Flextronics for an initial payment of $100 million, which will be convertible over time into 11 million shares of Flextronics stock. This represents about a 5-percent stake in the company.
“Both companies have agreed to develop our businesses together in a substantial way, from e-commerce connections to global supply of a wide range of services, while sharing some financial costs and gains,” said Michael Marks, chairman and chief executive officer of Flextronics.
Following the announcement last Wednesday, shares of Flextronics were trading at $55.44, up $5.38 from the previous day’s close. Motorola shares were up only slightly, trading at $97.13, compared with $96.44 the day prior.
