As filed with the Securities and Exchange Commission on July 11, 2007

Registration No. 333-          

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

 

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

 

 

FLEXTRONICS INTERNATIONAL LTD.

(Exact name of Registrant as specified in its charter)

 

 

 

 

 

 

 

 

 

 

 

Copies to:

 

 

 

 

 

Approximate date of commencement of proposed sale of the securities to the public: Upon completion of the merger described herein.

 

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  o

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

CALCULATION OF REGISTRATION FEE

 

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

SUBJECT TO COMPLETION, DATED JULY 11, 2007

PRELIMINARY COPY

 

MERGER PROPOSED — YOUR VOTE IS VERY IMPORTANT

 

On June 4, 2007, Flextronics International Ltd., Solectron Corporation and Saturn Merger Corp., a wholly-owned subsidiary of Flextronics, entered into an agreement and plan of merger pursuant to which Flextronics will acquire Solectron. If the merger is completed, Solectron stockholders (including holders of outstanding restricted shares and former holders of the exchangeable shares of Solectron Global Services Canada Inc. who have exchanged their exchangeable shares for Solectron common stock in connection with the merger) will be entitled to receive, for each share of Solectron common stock they own and at the election of the stockholder, either: (i) 0.3450 of a Flextronics ordinary share, or (ii) a cash payment of $3.89, without interest. As further described in this joint proxy statement/prospectus, the merger agreement provides that, regardless of the elections made by Solectron stockholders, no more than 70% of Solectron’s shares of common stock outstanding immediately prior to the closing of the merger can be converted into Flextronics ordinary shares, and no more than 50% of Solectron’s shares of common stock outstanding immediately prior to the closing of the merger can be converted into cash. Therefore, the cash and stock elections made by Solectron stockholders will be subject to proration based on these limits. As a result, Solectron stockholders that have elected to receive either cash or Flextronics ordinary shares could in certain circumstances receive a combination of both cash and Flextronics ordinary shares.

 

Flextronics ordinary shares are traded on the NASDAQ Global Select Market under the symbol “FLEX.” Solectron common stock is traded on the New York Stock Exchange under the symbol “SLR.”

 

The merger cannot be completed unless Solectron stockholders adopt the merger agreement and Flextronics shareholders approve the issuance of Flextronics ordinary shares pursuant to the merger agreement, each at their respective stockholder meetings. The completion of the merger is also subject to the satisfaction or waiver of other conditions that are contained in the merger agreement. More information about Flextronics, Solectron, the merger agreement and the merger is contained elsewhere in this joint proxy statement/prospectus. You are encouraged to read this joint proxy statement/prospectus carefully before voting, including the section entitled “Risk Factors” beginning on page 26.

 

The Flextronics board of directors unanimously recommends that Flextronics shareholders vote “FOR” the proposal to approve the issuance of Flextronics ordinary shares pursuant to the merger agreement.

 

The Solectron board of directors unanimously recommends that Solectron stockholders vote “FOR” the proposal to adopt the merger agreement.

 

The proposals are being presented to Flextronics shareholders at the Flextronics annual general meeting and to Solectron stockholders at a special meeting of Solectron stockholders. The dates, times and places of those meetings are as follows:

 

 

Your vote is very important.  Whether or not you plan to attend your respective company’s meeting, please take the time to vote by completing and mailing the enclosed proxy card to your respective company or, if you are a stockholder of Solectron, by granting your proxy electronically over the Internet or by telephone. If your shares are held in “street name,” you must provide instructions to your broker in order to vote.

 

Sincerely,

 

 

Neither the Securities and Exchange Commission nor any state securities commission has approved the Flextronics ordinary shares to be issued in connection with the merger, or passed upon the adequacy or accuracy of this joint proxy statement/prospectus. Any representation to the contrary is a criminal offense.

 

This joint proxy statement/prospectus is dated     , 2007, and is first being mailed to stockholders of
Flextronics and Solectron on or about     , 2007.

 

FLEXTRONICS INTERNATIONAL LTD.
(Incorporated in the Republic of Singapore)
(Company Registration Number 199002645H)

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
To Be Held on     , 2007

 

To our shareholders:

 

You are cordially invited to attend, and NOTICE IS HEREBY GIVEN, of the annual general meeting of Shareholders of FLEXTRONICS INTERNATIONAL LTD., which will be held at our principal U.S. offices located at 2090 Fortune Drive, San Jose, California, 95131, U.S.A., at          :00 a.m., California Time on          , 2007, for the following purposes:

 

 

The full text of the resolutions proposed for approval by Flextronics’s shareholders is as follows:

 

As Special Business

 

1.  To pass the following resolution as an Ordinary Resolution:

 

“RESOLVED THAT, pursuant to the provisions of Section 161 of the Singapore Companies Act, Cap. 50, authority be and is hereby given for the allotment and issuance of ordinary shares in the capital of Flextronics to stockholders of Solectron Corporation pursuant to, and in accordance with, the Agreement and Plan of Merger, dated as of June 4, 2007, entered into among Flextronics, Saturn Merger Corp., a wholly-owned subsidiary of Flextronics, and Solectron Corporation, which agreement is referred to below as the Merger Agreement and which provides for the acquisition of Solectron Corporation by Flextronics, and the directors be and are hereby authorized to do all acts and to execute and deliver all instruments or documents as they may deem necessary or desirable in connection with, or to give effect to, the issuance of the ordinary shares.”

As Ordinary Business

 

2.  To re-elect each of the following Directors, who will retire by rotation pursuant to Article 95 of Flextronics’s Articles of Association, to the Board of Directors:

 

(a) Mr. James A. Davidson; and

 

(b) Mr. Lip-Bu Tan.

 

3.  To re-appoint Mr. Rockwell A. Schnabel to the Board of Directors of Flextronics pursuant to Section 153(6) of the Singapore Companies Act, Chapter 50, to hold office from the date of this Annual General Meeting until Flextronics’s next Annual General Meeting.

 

4.  To consider and vote upon a proposal to re-appoint Deloitte & Touche LLP as Flextronics’s independent registered public accounting firm for the fiscal year ending March 31, 2008, and to authorize the Board of Directors, upon the recommendation of the Audit Committee of the Board of Directors, to fix its remuneration.

 

As Special Business

 

5.  To pass the following resolution as an Ordinary Resolution:

 

“RESOLVED THAT, pursuant to the provisions of Section 161 of the Singapore Companies Act, Cap. 50, and without prejudice to the authority conferred pursuant to Ordinary Resolution No. 1 as set out in the Notice dated          , 2007 convening this Annual General Meeting to issue ordinary shares in the capital of Flextronics to stockholders of Solectron Corporation pursuant to the Merger Agreement (if such aforementioned resolution has been approved at this Annual General Meeting), but subject otherwise to the provisions of the Singapore Companies Act, Cap. 50 and Flextronics’s Articles of Association, authority be and is hereby given to Flextronics’s Directors to:

 

(a)  (i)  allot and issue ordinary shares in Flextronics’s capital; and/or

 

(ii)  make or grant offers, agreements or options that might or would require ordinary shares in Flextronics’s capital to be allotted and issued, whether after the expiration of this authority or otherwise (including but not limited to the creation and issue of warrants, debentures or other instruments convertible into ordinary shares in Flextronics’s capital),

 

at any time to and/or with such persons and upon such terms and conditions and for such purposes as Flextronics’s Directors may in their absolute discretion deem fit, and with such rights or restrictions as Flextronics’s Directors may think fit to impose and as are set forth in Flextronics’s Articles of Association; and

 

(b)  (notwithstanding that the authority conferred by this resolution may have ceased to be in force) allot and issue ordinary shares in Flextronics’s capital in pursuance of any offer, agreement or option made or granted by Flextronics’s Directors while this resolution was in force,

 

and that such authority shall continue in force until the conclusion of Flextronics’s next Annual General Meeting or the expiration of the period within which its next Annual General Meeting is required by law to be held, whichever is the earlier.”

 

6.  To pass the following resolution as an Ordinary Resolution:

 

“RESOLVED THAT, approval be and is hereby given for Flextronics to provide:

 

(a)  Annual cash compensation of $60,000 to each of Flextronics’s non-employee Directors for services rendered as a director;

 

(b)  Additional annual cash compensation of $50,000 to the Chairman of the Audit Committee (if appointed) of the Board of Directors of Flextronics for services rendered as Chairman of the Audit Committee and for his or her participation on the Audit Committee;

 

(c)  Additional annual cash compensation of $15,000 to each other non-employee Director of Flextronics who serves on the Audit Committee for his or her participation on the Audit Committee;

(d)  Additional annual cash compensation of $25,000 to the Chairman of the Compensation Committee (if appointed) of the Board of Directors of Flextronics for services rendered as Chairman of the Compensation Committee and for his or her participation on the Compensation Committee;

 

(e)  Additional annual cash compensation of $10,000 to the Chairman of the Nominating and Corporate Governance Committee (if appointed) of the Board of Directors of Flextronics for services rendered as Chairman of the Nominating and Corporate Governance Committee and for his or her participation on the Nominating and Corporate Governance Committee;

 

(f)  Additional annual cash compensation of $10,000 to the Chairman of the Finance Committee (if appointed) of the Board of Directors of Flextronics for services rendered as Chairman of the Finance Committee and for his or her participation on the Finance Committee; and

 

(g)  Additional annual cash compensation of $5,000 to each of Flextronics’s non-employee Directors for their participation on each standing committee (other than the Audit Committee) of the Board of Directors on which such Director serves.”

 

7.  To pass the following resolution as an Ordinary Resolution:

 

“RESOLVED THAT:

 

(a)  for the purposes of Sections 76C and 76E of the Singapore Companies Act, Cap. 50, the exercise by Flextronics’s Directors of all of Flextronics’s powers to purchase or otherwise acquire issued ordinary shares in the capital of Flextronics, not exceeding in aggregate the number of issued ordinary shares representing 10% of the total number of issued ordinary shares in the capital of Flextronics as at the date of the passing of this resolution (excluding any ordinary shares which are held as treasury shares as at that date), at such price or prices as may be determined by Flextronics’s Directors from time to time up to the maximum purchase price described in paragraph (c) below, whether by way of:

 

(i)  market purchases on the NASDAQ Global Select Market or any other stock exchange on which Flextronics’s ordinary shares may for the time being be listed and quoted; and/or

 

(ii)  off-market purchases (if effected other than on the NASDAQ Global Select Market or, as the case may be, any other stock exchange on which Flextronics’s ordinary shares may for the time being be listed and quoted) in accordance with any equal access scheme(s) as may be determined or formulated by Flextronics’s Directors as they consider fit, which scheme(s) shall satisfy all the conditions prescribed by the Singapore Companies Act, Cap. 50,

 

and otherwise in accordance with all other laws and regulations and rules of the NASDAQ Global Select Market or, as the case may be, any other stock exchange on which Flextronics’s ordinary shares may for the time being be listed and quoted as may for the time being be applicable, be and is hereby authorized and approved generally and unconditionally;

 

(b)  unless varied or revoked by Flextronics’s shareholders in a general meeting, the authority conferred on Flextronics’s Directors pursuant to the mandate contained in paragraph (a) above may be exercised by Flextronics’s Directors at any time and from time to time during the period commencing from the date of the passing of this resolution and expiring on the earlier of:

 

(i) the date on which Flextronics’s next Annual General Meeting is held; or

 

(ii) the date by which Flextronics’s next Annual General Meeting is required by law to be held;

 

(c)  the maximum purchase price (excluding brokerage, commission, applicable goods and services tax and other related expenses) which may be paid for an ordinary share purchased or acquired by Flextronics pursuant to the mandate contained in paragraph (a) above, shall not exceed:

 

(i)  in the case of a market purchase of an ordinary share, the highest independent bid or the last independent transaction price, whichever is higher, of Flextronics’s ordinary shares quoted or reported on the NASDAQ Global Select Market at the time the purchase is effected; and

 

(ii)  in the case of an off-market purchase pursuant to an equal access scheme, 150% of the Prior Day Close Price, which means the closing price of Flextronics’s ordinary shares as quoted on the

NASDAQ Global Select Market or, as the case may be, any other stock exchange on which Flextronics’s ordinary shares may for the time being be listed and quoted, on the day immediately preceding the date on which Flextronics announces its intention to make an offer for the purchase or acquisition of its ordinary shares from holders of its ordinary shares, stating therein the purchase price (which shall not be more than the maximum purchase price calculated on the foregoing basis) for each ordinary share and the relevant terms of the equal access scheme for effecting the off-market purchase; and

 

(d)  Flextronics’s Directors and/or any of them be and are hereby authorized to complete and do all such acts and things (including executing such documents as may be required) as they and/or he may consider expedient or necessary to give effect to the transactions contemplated and/or authorized by this resolution.”

 

8.  To pass the following resolution as an Ordinary Resolution:

 

“RESOLVED THAT:

 

Approval be and is hereby given for the amendment to Flextronics’s 2001 Equity Incentive Plan, which is referred to as the 2001 Plan, to increase the sub-limit on the maximum number of ordinary shares which may be issued as stock bonus awards under the 2001 Plan from 10,000,000 ordinary shares to 15,000,000 ordinary shares.”

 

9.  To pass the following resolution as an Ordinary Resolution:

 

“RESOLVED THAT:

 

Approval be and is hereby given to amend the 2001 Plan to increase the maximum number of ordinary shares authorized for issuance under the 2001 Plan from 32,000,000 ordinary shares to 42,000,000 ordinary shares and that an additional 10,000,000 ordinary shares be reserved for issuance under the 2001 Plan, and that such ordinary shares, when issued and paid for in accordance with the terms of the 2001 Plan, shall be validly issued, fully-paid and non-assessable ordinary shares in Flextronics’s capital.”

 

10.  To transact any other business as may properly be transacted at any Annual General Meeting.

 

Notes

 

At the 2007 annual general meeting, Flextronics’s shareholders will have the opportunity to discuss and ask any questions that they may have regarding Flextronics’s Singapore audited accounts for the fiscal year ended March 31, 2007, together with the reports of the directors and auditors thereon, in compliance with Singapore law. Shareholder approval of Flextronics’s audited accounts is not being sought by this joint proxy statement/prospectus and will not be sought at the 2007 annual general meeting.

 

The board of directors has fixed the close of business on          , 2007 as the record date for determining those shareholders of Flextronics who will be entitled to receive copies of this notice and accompanying joint proxy statement/prospectus. However, all shareholders of record on           will be entitled to vote at the 2007 annual general meeting.

 

Representation of at least 331/3% of all outstanding ordinary shares of Flextronics is required to constitute a quorum. Accordingly, it is important that your shares be represented at the 2007 annual general meeting.

 

A shareholder entitled to attend and vote at the 2007 annual general meeting is entitled to appoint a proxy to attend and vote on his or her behalf. A proxy need not also be a shareholder. Whether or not you plan to attend the meeting, please complete, date and sign the enclosed proxy card and return it in the enclosed envelope. A proxy card must be received by Flextronics c/o Proxy Services, c/o Computershare Investor Services, PO Box 43101, Providence, RI 02940-5067 not less than 48 hours before the time appointed for holding the 2007 annual general meeting. You may revoke your proxy at any time prior to the time it is voted. Shareholders who are present at the meeting may revoke their proxies and vote in person or, if they prefer, may abstain from voting in person and allow their proxies to be voted.

Only funds legally available for purchasing or acquiring Flextronics’s issued ordinary shares in accordance with Flextronics’s Articles of Association and the applicable laws of Singapore will be used for the purchase or acquisition by Flextronics of its own issued ordinary shares pursuant to the proposed renewal of the Share Purchase Mandate referred to in Proposal No. 7. Flextronics intends to use its internal sources of funds and/or borrowed funds to finance the purchase or acquisition of its issued ordinary shares. The amount of financing required for Flextronics to purchase or acquire its issued ordinary shares, and the impact on its financial position, cannot be ascertained as of the date of this notice, as these will depend on the number of ordinary shares purchased or acquired and the price at which such ordinary shares are purchased or acquired and whether the ordinary shares purchased or acquired are held in treasury or cancelled. Flextronics’s net tangible assets and the consolidated net tangible assets of Flextronics and its subsidiaries will be reduced by the purchase price of any ordinary shares purchased or acquired and cancelled. Flextronics does not anticipate that the purchase or acquisition of its ordinary shares in accordance with the Share Purchase Mandate would have a material impact on its consolidated results of operations, financial condition and cash flows.

 

By Order of the Board of Directors,

 

 

          , 2007

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON     , 2007

 

To the Stockholders of Solectron Corporation:

 

The board of directors of Solectron Corporation has called for a special meeting of Solectron stockholders to be held on          , 2007, at          :00 a.m., California Time, at Solectron’s principal executive offices at 847 Gibraltar Drive, Building 5, Milpitas, California 95035, for the following purposes:

 

1. To consider and vote upon a proposal to adopt the Agreement and Plan of Merger, dated as of June 4, 2007, by and among Flextronics, Saturn Merger Corp. and Solectron; and

 

2. To transact such other business as may properly be brought before the Solectron special meeting or any adjournments or postponements of the Solectron special meeting.

 

Only holders of record of Solectron common stock and the holder of the one issued and outstanding share of Series B Preferred Stock of Solectron at the close of business on          , 2007, the record date for the special meeting, are entitled to notice of, and to vote at, the Solectron special meeting or any adjournments of the special meeting.

 

We cannot complete the merger unless holders of a majority of the aggregate voting power of the outstanding shares of Solectron common stock and the outstanding share of Solectron Series B Preferred Stock, voting together as one class, vote in favor of the proposal to adopt the merger agreement and thus approve the merger. The holder of the outstanding share of Series B Preferred Stock is entitled to a number of votes with respect to the share of Series B Preferred Stock equal to the number of issued and outstanding exchangeable shares of Solectron Global Services Canada Inc. as of the record date for this meeting that are not owned by Solectron, any of its subsidiaries or other affiliates.

 

For more information about the proposal to adopt the merger agreement described above and the other transactions contemplated by the merger agreement, please review the accompanying joint proxy statement/prospectus and the merger agreement attached to it as Annex A-1.

 

The board of directors of Solectron unanimously recommends that Solectron stockholders vote “FOR” the proposal to adopt the merger agreement.

 

Your vote is important. Whether or not you plan to attend the special meeting, please complete, sign and date the enclosed proxy card and return it promptly in the enclosed postage-paid envelope. You may also cast your vote by telephone or by using the Internet as described in the instructions included with your proxy card. Your failure to vote will have the same effect as voting against the merger.

 

By Order of the Board of Directors,

 

Todd DuChene

Executive Vice President,

General Counsel and Secretary

Milpitas, California

          , 2007

 

PLEASE VOTE YOUR SHARES PROMPTLY. YOU CAN FIND INSTRUCTIONS FOR VOTING ON THE ENCLOSED PROXY CARD. IF YOU HAVE QUESTIONS ABOUT THE PROPOSAL TO ADOPT THE MERGER AGREEMENT OR ABOUT VOTING YOUR SHARES, PLEASE CALL            AT           .

 

TABLE OF CONTENTS

 

 

Unless the context requires otherwise, when used in this joint proxy statement/prospectus, “Flextronics” refers to Flextronics International Ltd. and its subsidiaries, and “Solectron” refers to Solectron Corporation and its subsidiaries. In this joint proxy statement/prospectus, references to “$” are to United States dollars and references to “S$” are to Singapore dollars.

 

This joint proxy statement/prospectus incorporates important business and financial information about Flextronics and Solectron from documents that each company has filed with the Securities and Exchange Commission, which is referred to in this joint proxy statement/prospectus as the SEC, under the Securities and Exchange Act of 1934, as amended, or the Exchange Act. For a list of documents incorporated by reference into this joint proxy statement/prospectus, please see the section entitled “Where You Can Find More Information” beginning on page 183 of this joint proxy statement/prospectus.

 

The information incorporated by reference into this joint proxy statement/prospectus, which has not been included in or delivered with this joint proxy statement/prospectus, is available to you without charge upon your written or oral request. You can obtain the documents incorporated by reference into this joint proxy statement/prospectus by accessing the SEC’s website maintained at www.sec.gov. Additionally, Flextronics will provide you with copies of this information relating to Flextronics (excluding all exhibits, unless specifically incorporated by reference in this joint proxy statement/prospectus) and Solectron will provide you with copies of this information relating to Solectron (excluding all exhibits, unless specifically incorporated by reference in this joint proxy statement/prospectus), in each case, without charge, upon written or oral request to:

 

 

In order to receive the documents before the special meeting of Solectron stockholders or the annual general meeting of Flextronics shareholders, you must make your requests no later than          , 2007.

 

Flextronics’s website, which is located at www.flextronics.com, contains additional information about Flextronics and provides access to Flextronics’s filings with the SEC. Solectron’s website, which is located at www.solectron.com, contains additional information about Solectron and provides access to Solectron’s filings with the SEC. Information contained on Flextronics’s website and Solectron’s website is not incorporated by reference in, and should not be considered a part of, this joint proxy statement/prospectus.

 

Flextronics and Solectron have both contributed to the information contained in this joint proxy statement/prospectus relating to the merger. Any information contained in or incorporated by reference in this joint proxy statement/prospectus relating to Flextronics has been supplied by Flextronics, and any information contained in or incorporated by reference in this joint proxy statement/prospectus relating to Solectron has been supplied by Solectron.

 

This document, which forms part of a registration statement on Form S-4 filed with the SEC by Flextronics, constitutes the following:

 

 

 

 

 

Georgeson Inc.
17 State Street — 10th Floor
New York, NY 10004
Banks and Brokers call: (212) 440-9800
All others call: (888) 605-7554

 

 

 

InnisFree M&A Incorporated

501 Madison Avenue, 20^th Floor

New York, New York 10022

Toll Free from within the United States and Canada: 877-825-8971

Banks and Brokers call collect: 212-750-5833

 

Cristian Couchot

Corporate Trust Officer

Computershare Trust Company of Canada

710, 530-8^th Ave SW

Calgary, Alberta T2P 3S8

Telephone: 403-267-6510

Fax: 403-267-6598

 

The following is a summary of the information related to the merger contained in this joint proxy statement/prospectus. This summary may not contain all of the information about the merger that is important to you. For a more complete description of the merger, Flextronics and Solectron encourage you to carefully read this entire joint proxy statement/prospectus, including the attached annexes. In addition, Flextronics and Solectron encourage you to read the information incorporated by reference into this joint proxy statement/prospectus, which includes important business and financial information about Flextronics and Solectron. You may obtain the information incorporated by reference into this joint proxy statement/prospectus without charge by following the instructions in the section entitled “Where You Can Find More Information” beginning on page 183 of this joint proxy statement/prospectus.

 

The Merger and the Merger Agreement (see pages 44 and 85)

 

Flextronics has agreed to acquire Solectron pursuant to the terms of a merger agreement that is described in this joint proxy statement/prospectus. Under the merger agreement, the merger will be structured as an integrated two-step transaction. In the first step, a wholly-owned subsidiary of Flextronics will merge with and into Solectron, with Solectron continuing as the surviving corporation and becoming a wholly-owned subsidiary of Flextronics. In the second step, which will occur immediately following the first step, Solectron, as the surviving corporation of the first merger, will merge with and into a second wholly-owned subsidiary of Flextronics, with this second subsidiary continuing as the surviving corporation and as a wholly-owned subsidiary of Flextronics. If, however, Flextronics or Solectron is unable to obtain an opinion of counsel to the effect that, for U.S. federal income tax purposes, the two-step merger will qualify generally as a reorganization within the meaning of Section 368(a) of the Code, the merger may be structured as a single merger of a wholly-owned subsidiary of Flextronics merging with and into Solectron, with Solectron continuing as the surviving corporation and becoming a wholly-owned subsidiary of Flextronics.

 

Upon completion of the merger, each share of Solectron common stock will be converted into the right to receive 0.3450 of an ordinary share of Flextronics or $3.89 in cash, without interest, as merger consideration. Solectron’s stockholders will be able to elect to receive Flextronics ordinary shares or cash consideration. Each Solectron stockholder will be able to elect only one type of consideration for all of the Solectron common stock it owns. Under the merger agreement, however, at least 50%, but no more than 70%, of the shares of Solectron common stock outstanding immediately prior to completion of the merger will be converted into the right to receive Flextronics ordinary shares, and at least 30% but no more than 50%, of the shares of Solectron common stock outstanding immediately prior to completion of the merger will be converted into the right to receive cash. Therefore, the cash and stock elections made by Solectron stockholders will be subject to proration based on these limits. As a result, Solectron stockholders that have elected to receive either cash or Flextronics ordinary shares could in certain circumstances receive a combination of both cash and Flextronics ordinary shares. Solectron stockholders that fail to make an election will receive cash, Flextronics ordinary shares or a combination of the two, depending on the results of the elections made by electing Solectron stockholders and the limits on the aggregate number of Solectron shares that can be converted to stock consideration and cash consideration in the merger.

 

A copy of the merger agreement is attached as Annex A-1 to this joint proxy statement/prospectus, and Flextronics and Solectron encourage you to read the merger agreement in its entirety.

 

Election of Merger Consideration (page 88 and Annex F)

 

Concurrently with the mailing of this joint proxy statement/prospectus, the exchange agent will mail an election form to Solectron stockholders which is to be used to elect the form of merger consideration they wish to receive. The exchange agent will also make available election forms to holders of Solectron common stock who request such forms before the election deadline described below. To make an election, a holder of Solectron common stock must submit a properly completed election form to the exchange agent by the election deadline. The deadline for Solectron stockholders to submit their election forms will be 5:00 p.m., New York City Time, on the later of (i) the date of the Solectron stockholders’ meeting and (ii) a date mutually agreed to by Flextronics and Solectron that is as near as practicable to 10 business days prior to the expected closing date of the merger agreement. Flextronics and Solectron will issue a press release announcing the date of the election deadline not more than 15, but at least 10, business days prior to the election deadline.

The election form will also be mailed to holders of exchangeable shares that are entitled to direct votes attaching to the one share of Series B Preferred Stock of Solectron. Holders of exchangeable shares must observe the same procedures, restrictions and requirements as holders of Solectron common stock in order for their election to be timely and properly made.

 

Solectron stockholders (including holders of exchangeable shares) may revoke a previously submitted form of election by submitting written notice of revocation that is received by the exchange agent prior to the election deadline, at the following addresses:

 

 

The written notice of revocation must specify the account name and such other information as the exchange agent may request in the election form. Revocations may not be in part. Upon revoking a prior election, Solectron stockholders may submit another election in accordance with the election procedures described in this joint proxy statement/prospectus.

 

Any stockholder holding Solectron shares in “street name” should follow any instructions for revoking or changing their election provided by their broker.

 

Risk Factors (see page 26)

 

The “Risk Factors” section beginning on page 26 of this joint proxy statement/prospectus should be considered carefully by Flextronics shareholders and Solectron stockholders in evaluating whether to approve the respective proposals of Flextronics and Solectron. These risk factors should be considered together with the risk factors that are contained in the reports of Flextronics and Solectron filed with the SEC, and any other information included in or incorporated by reference into this joint proxy statement/prospectus.

 

The Flextronics Annual General Meeting (see page 37)

 

Flextronics will hold its annual general meeting of shareholders on          , 2007, at     :00 a.m., California Time, at Flextronics’s principal U.S. offices, 2090 Fortune Drive, San Jose, California, 95131, at which Flextronics shareholders will be asked to consider and vote upon the following matters:

 

 

The close of business on          , 2007 is the record date for shareholders entitled to notice of the 2007 annual general meeting of Flextronics. All of the ordinary shares issued on          , 2007 are entitled to be voted at the 2007 annual general meeting, and shareholders of record on          , 2007 and entitled to vote at the meeting will, on a poll, have one vote for each ordinary share so held on the matters to be voted upon. As of July 10, 2007, Flextronics had 608,940,696 ordinary shares issued and outstanding. Flextronics shareholders are entitled to cast one vote per Flextronics

ordinary share owned as of the date of the Flextronics annual general meeting. Eleven directors and executive officers of Flextronics, who together hold approximately          % of Flextronics ordinary shares outstanding as of the record date, have agreed to vote in favor of Proposal No. 1.

 

Approval of the proposal to authorize the issuance of Flextronics ordinary shares pursuant to the merger agreement is a condition to completion of the merger. Adoption of the other proposals at the Flextronics annual general meeting is not a condition to completion of the merger.

 

The Special Meeting of Solectron Stockholders (see page 40)

 

Solectron will hold a special meeting of its stockholders on          , 2007, at          :00 a.m., California Time, at Solectron’s principal executive offices, 847 Gibraltar Drive, Building 5, Milpitas, California 95035, at which Solectron stockholders will be asked to consider and vote upon a proposal to adopt the merger agreement.

 

Only holders of record of Solectron common stock and the holder of the one issued and outstanding share of Series B Preferred Stock of Solectron at the close of business on          , 2007, the record date for the special meeting, are entitled to notice of, and to vote at, the Solectron special meeting or any adjournments of the special meeting.

 

The merger cannot be completed unless holders of a majority of the aggregate voting power represented by the outstanding shares of Solectron common stock and the outstanding share of Solectron Series B Preferred Stock, voting together as one class, vote in favor of the proposal to adopt the merger agreement. Holders of Solectron common stock are entitled to one vote for each share of Solectron common stock that such holder beneficially holds. The holder of the outstanding share of Series B Preferred Stock is entitled to a number of votes with respect to the share of Series B Preferred Stock equal to the number of issued and outstanding exchangeable shares as of the record date for this meeting that are not owned by Solectron, any of its subsidiaries or other affiliates. Eighteen directors and executive officers of Solectron, who together hold approximately          % of Solectron common stock outstanding as of the record date, have agreed to vote in favor of the merger.

 

Flextronics’s Reasons for the Merger and Board Recommendation (see page 49)

 

The Flextronics board of directors based its decision to approve the merger agreement and the merger, and to recommend that Flextronics shareholders approve the issuance of ordinary shares in the merger, based on a variety of factors, including, without limitation, the following anticipated strategic benefits of the merger:

 

 

 

After careful consideration, Flextronics’s board of directors unanimously determined that the merger, the merger agreement and the transactions contemplated by the merger agreement are advisable and in the interests of Flextronics and its shareholders. The Flextronics board of directors unanimously recommends that Flextronics shareholders vote “FOR” the proposal to approve the issuance of Flextronics ordinary shares pursuant to the merger agreement.

 

Opinion of Flextronics’s Financial Advisor (see page 51)

 

Citigroup Global Markets Inc., referred to in this joint proxy statement/prospectus as Citigroup, has acted as financial advisor to Flextronics in connection with the merger. Citigroup made a presentation to the Flextronics board of directors in which Citigroup reviewed certain financial analyses and rendered to the Flextronics special acquisition committee of the board of directors an oral opinion, subsequently confirmed in writing to the Flextronics board of directors, that as of June 3, 2007, and subject to the factors, assumptions, procedures, limitations and qualifications set forth in the opinion, the consideration to be paid by Flextronics in the acquisition is fair, from a financial point of view, to Flextronics.

 

The full text of Citigroup’s written opinion dated June 3, 2007, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with its opinion, is included as Annex D to this joint proxy statement/prospectus. Citigroup’s opinion was limited solely to the fairness to Flextronics of the acquisition consideration from a financial point of view as of the date of the opinion. Neither Citigroup’s opinion nor the related analyses constituted a recommendation of the proposed acquisition to the Flextronics board of directors. Citigroup makes no recommendation to any stockholder as to how you should vote or act on any matters relating to the proposed acquisition. Citigroup was not requested to consider, and its opinion does not address, the relative merits of the acquisition compared to any alternative business strategies that might exist for Flextronics or the effect of any other transaction in which Flextronics might engage. This summary of Citigroup’s opinion is qualified in its entirety by reference to the full text of the opinion. You are urged to read Citigroup’s opinion carefully and in its entirety.

 

Solectron’s Reasons for the Merger and Board Recommendation (see page 56)

 

The Solectron board of directors identified the following anticipated strategic and financial benefits of the merger:

 

 

 

After careful consideration, the Solectron board of directors unanimously determined that the merger agreement and the transactions contemplated by the merger agreement, including the merger, are advisable and fair to and in the best interests of the Solectron stockholders and has unanimously approved the merger agreement. The Solectron board of directors unanimously recommends that the Solectron stockholders vote “FOR” the adoption of the merger agreement.

 

Opinion of Solectron’s Financial Advisor (see page 60)

 

Goldman, Sachs & Co., referred to in this joint proxy statement/prospectus as Goldman Sachs, delivered its opinion to Solectron’s board of directors that, as of June 4, 2007 and based upon and subject to the factors and assumptions set forth therein, the Stock Consideration and the Cash Consideration (as such terms are defined in the written opinion of Goldman Sachs) to be received by the holders of Shares (as such term is defined in the written opinion of Goldman Sachs), taken in the aggregate, was fair from a financial point of view to such holders.

 

The full text of the written opinion of Goldman Sachs, dated June 4, 2007, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex E. Goldman Sachs provided its opinion for the information and assistance of Solectron’s board of directors in connection with its consideration of the transaction. The Goldman Sachs opinion does not constitute a recommendation as to how any holder of Solectron’s common stock should vote or make any election with respect to the transaction or any other matter. Pursuant to an engagement letter between Solectron and Goldman Sachs, Solectron has agreed to pay Goldman Sachs a transaction fee based on 0.32% of the aggregate consideration paid in the transaction, 25% of which became payable upon execution of the merger agreement and the remainder of which is payable upon consummation of the transaction.

Interests of Solectron’s Officers and Directors in the Merger (see page 67)

 

When considering the Solectron board of directors’ recommendation that Solectron stockholders vote in favor of the proposal to adopt the merger agreement, Solectron’s stockholders should be aware that Solectron’s directors and executive officers may have interests in the merger that differ from, or which are in addition to, the interests of Solectron stockholders. These interests create a potential conflict of interest and may be perceived to have affected their decision to support or approve the merger. The Solectron board of directors was aware of these potential conflicts of interest during its deliberations on the merits of the merger and in making its decisions in approving the merger agreement, the merger and the related transactions. These interests include possible continued employment of certain executive officers of Solectron by the combined company, the continuation of indemnification rights and coverage under existing or new directors’ and officers’ liability insurance policies, accelerated vesting of stock awards to executive officers and directors and the receipt of other benefits, including accelerated vesting of amounts contributed to the accounts of executive officers in the Solectron Executive Deferred Compensation Plan, that would be triggered by certain terminations on or following the consummation of the merger. Solectron stockholders should be aware of these interests when considering the Solectron board of directors’ recommendation to adopt the merger agreement.

 

Solectron Is Prohibited from Soliciting Other Offers (see page 97)

 

The merger agreement contains detailed provisions that prohibit Solectron and its subsidiaries, and their officers and directors, from taking any action to solicit or engage in discussions or participate in negotiations with any person or group with respect to an acquisition proposal, as defined in the merger agreement, including an acquisition that would result in the person or group acquiring more than a 20% interest in Solectron’s or any of its subsidiaries’ total outstanding voting securities, a merger, consolidation or other business combination involving Solectron or any of its subsidiaries, a sale, lease outside the ordinary course of business, exchange, transfer, license outside the ordinary course of business, acquisition or disposition of more than 20% of the assets of Solectron (including its subsidiaries taken as a whole), or any liquidation or dissolution of Solectron. Solectron is also required to use all reasonable best efforts to cause its advisors to comply with these restrictions. The merger agreement does not, however, prohibit Solectron or its board of directors from considering and, in certain circumstances, from potentially recommending, an unsolicited bona fide written acquisition proposal from a third party if specified conditions are met.

 

Change of Board Recommendation (see page 96)

 

Subject to specified conditions, the board of directors of Solectron may withdraw or modify its recommendation in support of the adoption of the merger agreement by Solectron’s stockholders. In the event that the board of directors of Solectron withdraws or modifies its recommendation in a manner adverse to Flextronics, Solectron may be required to pay a termination fee of $100.0 million to Flextronics.

 

Flextronics and Solectron May Terminate the Merger Agreement under Specified Circumstances (see page 106)

 

Under circumstances specified in the merger agreement, either Flextronics or Solectron may terminate the merger agreement. These circumstances generally include if:

 

 

 

Additionally, prior to the adoption of the merger agreement by Solectron’s stockholders, Flextronics may terminate the merger agreement if the board of directors of Solectron takes certain specified actions in opposition to the merger that are described as triggering events in the merger agreement. Solectron may terminate the merger agreement if it enters into a definitive agreement with respect to an alternative acquisition under specified conditions and pays the termination fee to Flextronics.

 

Payment of a Termination Fee under Specified Circumstances (see page 108)

 

If the merger agreement is terminated under specified circumstances, Solectron could be required to pay a termination fee of $100.0 million to Flextronics and, in certain other specified circumstances, Flextronics could be required to pay a termination fee of $100.0 million to Solectron.

 

What Is Needed to Complete the Merger (see page 104)

 

Several conditions must be satisfied or waived before Flextronics and Solectron complete the merger, including those summarized below:

 

 

If the law permits, either Solectron or Flextronics could choose to waive a condition to its obligation to complete the merger even though that condition has not been satisfied.

 

In addition, the obligation of Flextronics and Solectron to consummate the merger as a two-stop merger is subject to their receipt of an opinion from their respective tax counsel that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code, as amended, and that no gain (except to

the extent of cash received) will be recognized by Solectron stockholders, other than by certain stockholders in certain situations.

 

Treatment of Exchangeable Shares and Series B Preferred Stock (see Annex F)

 

Under the merger agreement, Solectron has agreed to take all action necessary to cause 3942163 Canada Inc., or Callco, a wholly-owned indirect subsidiary of Solectron, to acquire, prior to the effective time of the merger, all the issued and outstanding exchangeable shares, by exercising its overriding redemption call right pursuant to the terms and conditions of the exchangeable shares. The purchase price payable by Callco in connection with the exchange, in respect of each exchangeable share, is one share of Solectron common stock (including an amount equal to the full amount of all declared but unpaid dividends on such exchangeable share, if any, and subject to applicable withholding taxes), which Solectron common stock will be issued prior to the effective time of the merger.

 

Upon completion of the exchange of exchangeable shares and prior to the effective time of the merger, Solectron will cause the one issued and outstanding share of Series B Preferred Stock in its capital to be cancelled in accordance with its terms.

 

Board of Directors and Management of the Combined Company

 

Under the terms of the merger agreement, Flextronics will appoint to its board of directors two individuals designated by Solectron and approved by Flextronics upon consummation of the merger, to hold office until their earlier resignation or removal in accordance with Flextronics’s Memorandum and Articles of Association. Following the merger, one or more of the executive officers of Solectron may become executive officers of Flextronics. In connection therewith, Flextronics may enter into compensatory arrangements with one or more executive officers of Solectron, which arrangements may include payments of cash and/or grants of equity securities of Flextronics.

 

Material U.S. Federal Income Tax Consequences of the Merger (see page 75)

 

The two-step merger has been structured to qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and it is a condition to closing that each of Flextronics and Solectron receive an opinion from legal counsel to the effect that the merger will so qualify. If the two-step merger qualifies as a reorganization, the U.S. federal income tax consequences of the merger to each Solectron stockholder will vary depending on whether that stockholder receives Flextronics ordinary shares, cash, or a combination of cash and Flextronics ordinary shares in exchange for that stockholder’s Solectron common stock.

 

If a Solectron stockholder receives only Flextronics ordinary shares in exchange for its Solectron common stock, that stockholder generally will not recognize gain or loss on the Solectron common stock surrendered pursuant to the merger. If a Solectron stockholder receives only cash in exchange for its Solectron common stock, that stockholder generally will recognize gain or loss equal to the difference between the amount of cash received and such stockholder’s tax basis in the Solectron common stock surrendered. If a Solectron stockholder receives a combination of cash and Flextronics ordinary shares in exchange for its Solectron common stock, such stockholder generally will recognize gain (but will not be permitted to recognize loss) for U.S. federal income tax purposes equal to the lesser of (i) the amount of cash that received, and (ii) the amount of gain realized by that stockholder.

 

If, however, Flextronics or Solectron is unable to obtain an opinion of counsel to the effect that, for U.S. federal income tax purposes, the two-step merger will qualify generally as a reorganization within the meaning of Section 368(a) of the Code, the transaction may be structured as a single-step merger of a wholly-owned subsidiary of Flextronics with and into Solectron, with Solectron continuing as the surviving corporation and becoming a wholly-owned subsidiary of Flextronics, in which case the transaction will not qualify as a tax-free reorganization under Section 368(a) of the Code. In that event, Solectron stockholders generally would recognize gain or loss on the shares of Solectron common stock surrendered in the transaction in the amount of the difference between their basis in such shares and the sum of the amount of cash and the fair market value of the Flextronics ordinary shares received in exchange for the shares of Solectron common stock.

 

Solectron stockholders are urged to read the discussion in the section entitled “Solectron Proposal and Flextronics Proposal No. 1 — The Merger — Material U.S. Federal Income Tax Consequences of the Merger”

beginning on page 75 of this joint proxy statement/prospectus and to consult their tax advisors as to the U.S. federal income tax consequences of the merger, as well as the effect of state, local and non-U.S. tax laws.

 

Flextronics Financing (see page 79)

 

Flextronics estimates that it will require up to approximately $1.9 billion to pay the cash portion of the merger consideration, including acquisition and financing related costs, assuming 50% of Solectron’s outstanding shares elect to receive cash. Flextronics currently has a $2.0 billion credit facility through a syndicate of banks led by Bank of America, N.A. Simultaneously with execution of the merger agreement, Flextronics and Citigroup agreed to the terms of a commitment letter pursuant to which Citigroup has committed to provide Flextronics with a seven-year, senior unsecured term loan facility of up to $2.5 billion to fund the cash requirements for the transaction, including the repurchase or refinancing of Solectron’s debt, if required. The merger is not conditioned on receipt of financing by Flextronics and Flextronics continues to evaluate alternative long-term financing arrangements.

 

The Merger Is Subject to Approval of Regulatory Authorities (see page 80)

 

In order to complete the merger, Flextronics and Solectron must notify, furnish information to, and, where applicable, obtain clearance from competition authorities in Brazil, Canada, China, the European Commission, Mexico, Turkey and Ukraine. Flextronics and Solectron will also notify and furnish information to, on a voluntary basis, the competition authorities in Singapore. The merger is also subject to U.S. antitrust laws and, as such, is subject to review by the Department of Justice and/or the Federal Trade Commission under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or the HSR Act. Flextronics and Solectron have made their filings under the HSR Act, and have made or will make the necessary filings with competition authorities in the remaining jurisdictions. Although Flextronics and Solectron expect to obtain the required regulatory approvals in all of these jurisdictions, there can be no assurance that Flextronics and Solectron will obtain the regulatory approvals necessary or that the granting of these regulatory approvals will not involve the imposition of conditions on the completion of the merger or require changes to the terms of the merger. In addition, in some jurisdictions, a competitor, customer or other third party could initiate a private action under the antitrust or other laws challenging or seeking to enjoin the merger, before or after it is completed.

 

Trading of Flextronics Ordinary Shares Received in the Merger; Delisting of Solectron Common Stock and Exchangeable Shares

 

If Flextronics and Solectron complete the merger, Solectron stockholders will be able to trade the Flextronics ordinary shares they receive in the merger on the NASDAQ Global Select Market, subject to restrictions on affiliates of Solectron. If Flextronics and Solectron complete the merger, Solectron common stock will no longer be listed on the New York Stock Exchange or any other market or exchange. Further, Solectron Global Services Canada Inc. exchangeable shares will be delisted from the Toronto Stock Exchange.

 

Appraisal Rights (see page 81)

 

Under Delaware law, Solectron stockholders that hold Solectron common stock are entitled to appraisal rights if they comply with the applicable provisions of Delaware law. Additionally, under Delaware law, if the record holder of the one share of Solectron Series B Preferred Stock does not vote in favor of the adoption of the merger agreement at the Solectron special meeting, then the record holder has the right to seek an appraisal of, and to be paid the fair value for, the Series B Preferred Stock if the stockholder otherwise complies with the applicable provisions of Delaware law.

 

To obtain an appraisal, Solectron stockholders must submit a written demand for an appraisal before the vote on the approval of the merger agreement and must continue to hold their Solectron shares until the effective date of the merger. Solectron stockholders must also comply with other procedures as required by Delaware law. If Solectron stockholders validly demand appraisal of their shares in accordance with Delaware law and do not withdraw their demand or otherwise forfeit their appraisal rights, they will not receive the merger consideration. Instead, after completion of the proposed merger, a court will determine the fair value of their shares exclusive of any value arising from the proposed merger. This appraisal amount will be paid in cash and could be more than, the same as or less than the amount a Solectron stockholder would be entitled to receive under the terms of the merger agreement.

 

The selected historical consolidated financial data for each year in the five-year period ended March 31, 2007, were derived from Flextronics’s consolidated financial statements for those periods. This information is only a summary and should be read in conjunction with Flextronics’s historical consolidated financial statements and related notes and the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in the annual and quarterly reports of Flextronics and in conjunction with the other information that Flextronics has filed with the SEC which have been incorporated by reference into this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page 183 of this joint proxy statement/prospectus.

 

 

 

 

 

The selected historical consolidated financial data in the table below for the six months ended March 2, 2007 and February 24, 2006 were derived from Solectron’s unaudited consolidated financial statements. The selected historical consolidated financial data for each year in the five fiscal year period ended August 25, 2006, were derived from Solectron’s audited consolidated financial statements. This information should be read in conjunction with Solectron’s historical consolidated financial statements and related notes and the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in the annual and quarterly reports of Solectron and in conjunction with the other information that Solectron has filed with the SEC which have been incorporated by reference into this joint proxy statement/prospectus.

 

 

 

 

 

The merger will be accounted for by Flextronics under the purchase method of accounting, which means the assets and liabilities of Solectron will be recorded, as of the completion of the merger, at their respective fair values and added to those of Flextronics. For a more detailed description of purchase accounting, see the section entitled “The Merger — Accounting Treatment of the Merger” on page 79 of this joint proxy statement/prospectus.

 

The following table shows information about the unaudited pro forma financial condition and results of operations after giving effect to the merger. The table sets forth selected unaudited pro forma condensed combined statement of operations data as if the merger had become effective on April 1, 2006, and selected unaudited pro forma condensed combined balance sheet data as if the merger had become effective on March 31, 2007. Flextronics’s fiscal year ends on March 31 whereas Solectron’s financial reporting year ends on the last Friday in August. In order to prepare the selected unaudited pro forma condensed combined statement of operations for the year ended March 31, 2007, Solectron’s operating results have been aligned to more closely conform to those of Flextronics. Solectron’s statement of operations have been adjusted to present its results of operations for the twelve months ended March 2, 2007 by adding its interim period results for the six-months ended March 2, 2007 to its results of operations for the year ended August 25, 2006, and subtracting the comparable preceding year interim period results. In addition, certain reclassifications have been made as pro forma adjustments to Solectron’s historical financial statements to conform to the presentation used in Flextronics’s historical financial statements. Such reclassifications had no effect on Solectron’s previously reported results of operations.

 

The information presented below should be read together with the historical consolidated financial statements of Flextronics and Solectron, including the related notes, filed by each of them with the SEC and incorporated herein by reference, together with the summary selected consolidated historical financial data for Flextronics and Solectron and the other unaudited pro forma financial information, including the related notes, appearing elsewhere in this joint proxy statement/prospectus. See the sections entitled “Where You Can Find More Information” beginning on page 183 of this joint proxy statement/prospectus and “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 111 of this joint proxy statement/prospectus. The unaudited pro forma financial data are not necessarily indicative of results that actually would have occurred had the merger been completed on the dates indicated or that may be attained in the future. See the sections entitled “Risk Factors” beginning on page 26 of this joint proxy statement/prospectus and “Cautionary Statement Regarding Forward-Looking Information” beginning on page 25 of this joint proxy statement/prospectus.

 

 

 

 

 

The following table sets forth certain historical and pro forma combined per share data of Flextronics and Solectron and certain pro forma equivalent Solectron per share data. The information set forth below is only a summary and should be read in conjunction with selected historical consolidated financial data and selected unaudited pro forma condensed combined financial data contained elsewhere in this joint proxy statement/prospectus and the respective audited and unaudited financial statements and related notes of Flextronics and Solectron that are incorporated by reference into this joint proxy statement/prospectus. Neither Flextronics nor Solectron has declared or paid cash dividends in the last five years.

 

 

 

 

This joint proxy statement/prospectus (including information incorporated by reference herein) contains forward-looking statements within the meaning of federal securities laws relating to both Flextronics and Solectron. These forward-looking statements include statements related to the expected closing of the acquisition of Solectron by Flextronics, the expected synergies and benefits to the combined company and its customers from the acquisition, the ability of the acquisition to enable the combined company to capture new customers and expand relationships with existing customers, the impact of the acquisition on Flextronics’s earnings, the ability of Flextronics to successfully integrate Solectron’s business operations and employees, and potential difficulties or delays in obtaining regulatory or shareholder approvals for the proposed transaction. The results described in these forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated by the forward-looking statements, including, without limitation:

 

 

Other risks affecting the combined company are described in the section entitled “Risk Factors” on page 26 as well as those described in the reports on Form 10-K, Form 10-Q and Form 8-K filed by Flextronics and by Solectron with the SEC. The forward-looking statements in this joint proxy statement/prospectus (including information incorporated by reference herein) are based on current expectations and neither Flextronics nor Solectron assumes any obligation to update these forward-looking statements.

 

In addition to the other information included in or incorporated by reference into this joint proxy statement/prospectus, you should carefully read and consider the following material risks relating to the merger, and the business of the combined company before deciding whether to vote in favor of the proposal to adopt the merger agreement or to vote in favor of the proposal to authorize the issuance of Flextronics ordinary shares in the merger, as the case may be. You should also read and consider the risks associated with each of the businesses of Flextronics and Solectron because these risks will affect the combined company. These risks can be found in Flextronics’s Annual Report on Form 10-K for the fiscal year ended March 31, 2007, Solectron’s Quarterly Report on Form 10-Q for the quarter ended March 2, 2007 and in subsequent annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, which are filed by Flextronics and Solectron with the SEC and incorporated by reference into this document.

 

Because the market price of Flextronics ordinary shares will fluctuate, Solectron stockholders cannot be certain of the value of the merger consideration that they will receive in the merger.

 

If the merger is consummated, a maximum of 70% and no less than 50% of the Solectron common stock outstanding immediately prior to the closing of the merger will be converted into Flextronics ordinary shares. The exchange ratio at which each share of Solectron common stock will be converted into Flextronics ordinary shares is fixed at 0.3450 of a Flextronics ordinary share and will not be adjusted in the event that the price of either Flextronics ordinary shares or Solectron common stock increases or decreases prior to the closing of the merger. In addition, Solectron stockholders will have to make their election for cash or Flextronics ordinary shares by the later of the date of the Solectron special meeting and approximately ten business days prior to the expected completion of the merger. Further, obtaining required regulatory clearances and approvals and a number of other conditions beyond the control of Flextronics and Solectron may cause a substantial delay between the time of the Solectron special meeting and Flextronics annual general meeting and the completion of the merger.

 

The market value of Flextronics ordinary shares is likely to vary following the date of this joint proxy statement/prospectus, and prior to the date Solectron’s stockholders vote to adopt the merger agreement and Flextronics’s shareholders vote to authorize the issuance of Flextronics ordinary shares in the merger. In addition, the market value of Flextronics ordinary shares is likely to vary following the last date by which Solectron’s stockholders must elect whether to receive cash consideration or Flextronics ordinary shares, and prior to the date the merger is completed. The market value of Flextronics ordinary shares is likely to vary due to a variety of factors, including economic, business, competitive, market and regulatory conditions, or changes in the operations or prospects of Flextronics or Solectron. The value of the Flextronics ordinary shares to be received by Solectron stockholders in the merger will go up or down with any such fluctuations in the value of Flextronics ordinary shares prior to the completion of the merger. If the market price of Flextronics ordinary shares decreases, the value of Flextronics ordinary shares issued in the merger would decrease from the value of such shares on the date Solectron’s stockholders approved the merger agreement. Conversely, if the market price of the Flextronics ordinary shares issued upon completion of the merger increases, the value of the Flextronics ordinary shares issued to Solectron stockholders in the merger would be higher than the value of those shares on the date Flextronics’s shareholders approved the issuance of Flextronics ordinary shares at the Flextronics annual general meeting. In addition, Solectron stockholders will not know the relative value of the Flextronics ordinary shares to be issued in the merger at the time the Solectron stockholders make their election for either cash or Flextronics ordinary shares. After the merger, the market value of Flextronics ordinary shares will continue to fluctuate over time due to economic, business, competitive, market and regulatory factors.

 

Ownership of Flextronics ordinary shares may involve different risks than those affecting Solectron common stock.

 

Upon consummation of the merger, holders of Solectron common stock that receive Flextronics ordinary shares in the merger may be subject to different risks than they faced as Solectron stockholders. Flextronics’s business differs from that of Solectron’s and an investment in the combined company will expose Solectron’s

former stockholders to risks that are unique to Flextronics’s business. These risks are described in the documents that Flextronics files with the SEC that are incorporated by reference into this joint proxy statement/prospectus and referred to in the section entitled “Where You Can Find More Information” beginning on page 183 of this joint proxy statement/prospectus.

 

In addition, there are numerous differences between the rights of a stockholder of Solectron, a Delaware corporation, and the rights of a shareholder of Flextronics, a Singapore company. For a detailed discussion of these differences, see the section entitled “Comparison of Rights of Holders of Solectron Common Stock and Holders of Flextronics Ordinary Shares” beginning on page 124 of this joint proxy statement/prospectus.

 

Solectron stockholders will have less of an ability to influence Flextronics’s actions and decisions following the merger than they did with respect to Solectron’s business.

 

Upon the consummation of the merger, former Solectron stockholders will not hold a majority of the then outstanding Flextronics ordinary shares. For example, if the merger was consummated on the record date for the Solectron special meeting, and assuming that the former Solectron stockholders holding 70% of the outstanding shares of Solectron common stock elect to receive Flextronics ordinary shares as merger consideration, former Solectron stockholders would hold in the aggregate approximately     % of the outstanding Flextronics ordinary shares (based on the number of shares of Flextronics and Solectron outstanding as of the record date, including Solectron restricted shares and the exchangeable shares). Former Solectron stockholders will not have separate approval rights with respect to any actions or decisions of Flextronics. As a result, Solectron stockholders will have less of an ability to influence Flextronics’s business than they did with respect to Solectron’s business.

 

Solectron stockholders may receive a form or combination of consideration that differs from what they have elected to receive.

 

Although each Solectron stockholder may elect to receive either all cash or all Flextronics ordinary shares in the merger, the merger agreement provides that, regardless of the elections made by Solectron stockholders, at least 50% but no more than 70% of Solectron’s outstanding shares of common stock (including the outstanding exchangeable shares) will be converted into Flextronics ordinary shares, and at least 30% but no more than 50% of Solectron’s outstanding shares of common stock (including the outstanding exchangeable shares) will be converted into cash. As a result, the cash and stock elections made by Solectron stockholders will be subject to proration if either of these limits is exceeded, and Solectron stockholders that have elected to receive either cash or Flextronics ordinary shares could in certain circumstances receive a combination of both cash and Flextronics ordinary shares. In addition, if a Solectron stockholder fails to submit a properly completed and signed election form to the exchange agent by the election deadline, that stockholder will be unable to choose the type of merger consideration received, and, consequently, the stockholder may receive only cash, only Flextronics ordinary shares, or a combination of cash and Flextronics ordinary shares in the merger. Depending on each Solectron stockholder’s circumstances, there could be significant differences in the tax treatment of the different forms of consideration received by Solectron stockholders in the merger. See the sections entitled “The Merger Agreement — Election of Merger Consideration” beginning on page 88 of this joint proxy statement/prospectus and “The Merger — Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 75 of this joint proxy statement/prospectus.

 

The directors and executive officers of Solectron have interests and arrangements that could affect their decision to support or approve the merger.

 

When considering the Solectron board of directors’ recommendation that Solectron stockholders vote in favor of the proposal to adopt the merger agreement, Solectron’s stockholders should be aware that Solectron’s directors and executive officers may have interests in the merger that differ from, or which are in addition to, the interests of Solectron stockholders. These interests create a potential conflict of interest and may be perceived to have affected their decision to support or approve the merger. The Solectron board of directors was aware of these potential conflicts of interest during its deliberations on the merits of the merger and in making its decisions in approving the merger agreement, the merger and the related transactions. These interests include possible continued employment of certain executive officers of Solectron by the combined company, the continuation of indemnification rights and coverage under existing or new directors’ and officers’ liability insurance policies, accelerated vesting of stock

awards to executive officers and directors and the receipt of other benefits, including accelerated vesting of amounts contributed to the accounts of executive officers in the Solectron Executive Deferred Compensation Plan, that would be triggered by certain terminations on or following the consummation of the merger. Solectron stockholders should be aware of these interests when considering the Solectron board of directors’ recommendation to adopt the merger agreement. See the section entitled “The Merger — Interests of Solectron’s Officers and Directors in the Merger” beginning on page 67 of this joint proxy statement/prospectus.

 

If the merger does not qualify as a tax-free reorganization for U.S. federal income tax purposes, Solectron stockholders will recognize gain or loss on the exchange of Solectron common stock for Flextronics ordinary shares.

 

Although the Internal Revenue Service, or the IRS, has not provided and will not provide a ruling on the merger, Flextronics and Solectron each will seek to obtain a legal opinion from their respective tax counsel that the planned two-step merger will qualify as a tax-free reorganization under Section 368(a) of the Code. These opinions, if delivered, would neither bind the IRS nor prevent the IRS from adopting a contrary position. If either Flextronics’s counsel or Solectron’s counsel is unable to deliver such a legal opinion, then either Flextronics or Solectron may waive such condition unilaterally on behalf of all parties and the planned two-step merger will not be consummated. Instead, the transaction will proceed as a single-step merger where Saturn Merger Corp. will be merged with and into Solectron, with Solectron continuing as the surviving corporation and a wholly-owned subsidiary of Flextronics, a transaction that generally would not qualify as a tax-free reorganization under Section 368(a) of the Code. If the merger does not qualify as a tax-free reorganization under Section 368(a) of the Code for any reason, Solectron stockholders generally would recognize gain or loss on the shares of Solectron common stock surrendered in the merger in the amount of the difference between the basis in such shares and the sum of the amount of cash and the fair market value of the Flextronics ordinary shares received in exchange for such shares of Solectron common stock. If counsel for either Flextronics or Solectron is unable to deliver the required opinion, either Flextronics or Solectron, without needing the consent of the other party, could decide to proceed with a single-step merger that does not qualify as a tax-free reorganization under Section 368(a) of the Code. That decision could be made after the date of the Solectron special meeting and Solectron stockholders would not have the opportunity to consider that decision when determining whether to adopt the merger agreement at the Solectron special meeting. For a more complete description of the material U.S. federal income tax consequences of the merger, see the section entitled “The Merger — Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 75 of this joint proxy statement/prospectus.

 

Flextronics and Solectron may be unable to obtain the regulatory approvals required to complete the merger; delays or restrictions imposed by competition authorities could harm the combined company’s operations.

 

Flextronics and Solectron may be unable to obtain the regulatory approvals required to complete the transaction in the time period forecasted, if at all. In order to complete the merger, Flextronics and Solectron must notify, furnish information to, and, where applicable, obtain clearance from competition authorities in Brazil, Canada, China, the European Commission, Mexico, Turkey and Ukraine. Flextronics and Solectron will also notify and furnish information to, on a voluntary basis, the competition authorities in Singapore. The merger is also subject to U.S. antitrust laws and, as such, is subject to review by the Antitrust Division of the United States Department of Justice, or the DOJ, and the Federal Trade Commission, or the FTC, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or the HSR Act. Flextronics and Solectron made their filings under the HSR Act on June 14, 2007, and have made the necessary filings with competition authorities in Brazil on June 26, 2007, in Canada on July 6, 2007, in Mexico on July 6, 2007, in Turkey on July 3, 2007 and in Ukraine on July 6, 2007. Flextronics and Solectron have informally notified the competition authorities in China, Mexico and the European Commission of the merger and expect to file formal notifications of the merger in China, the European Commission, Mexico and Singapore in mid-July 2007. Reviewing agencies or governments or private persons may challenge the merger under antitrust or similar laws at any time before or after its completion. Any resulting delay in the completion of the merger could diminish the anticipated benefits of the merger or result in additional transaction costs, loss of revenue or other effects associated with uncertainty about the transaction.

The reviewing authorities may not permit the merger at all or may impose restrictions or conditions on the merger that may seriously harm the combined company if the merger is completed. These conditions could include a complete or partial license, divestiture, spin-off or the holding separate of assets or businesses. Pursuant to the terms of the merger agreement, Flextronics is not required to agree to any divestiture of any shares of capital stock or of any business, assets or properties of Flextronics or its subsidiaries or affiliates (including Solectron or its subsidiaries) that will have or would reasonably be expected to have a material adverse effect on the benefits expected to be derived from the merger. In addition, Flextronics may refuse to complete the merger if governmental authorities impose any material restrictions or limitations on Flextronics, Solectron or their respective subsidiaries and their ability to conduct their respective businesses that will have or would reasonably be expected to have a material adverse effect on the benefits expected to be derived from the merger. Flextronics and Solectron also may agree to restrictions or conditions imposed by antitrust authorities in order to obtain regulatory approval, and these restrictions or conditions could harm the combined company’s operations.

 

Any delay in completing the merger may significantly reduce the benefits expected to be obtained from the merger.

 

In addition to receipt of required regulatory clearances and approvals, the merger is subject to a number of other conditions beyond the control of Flextronics and Solectron that may prevent, delay or otherwise materially adversely affect its completion. See the section entitled “The Merger Agreement — Conditions to Completion of the Merger” beginning on page 104 of this joint proxy statement/prospectus. Flextronics and Solectron cannot predict whether and when these other conditions will be satisfied. Further, the requirements for obtaining the required clearances and approvals could delay the completion of the merger for a significant period of time or prevent it from occurring. Any delay in completing the merger may affect the ability of Flextronics and Solectron to achieve the synergies and other benefits they expect to achieve from the merger within the forecasted timeframe.

 

Failure to complete the merger could materially and adversely affect Solectron’s and Flextronics’s results of operations and respective stock prices.

 

Consummation of the merger is subject to customary closing conditions, including obtaining the approval of Solectron’s stockholders and Flextronics shareholders to proposals that are described in this joint proxy statement/prospectus. There can be no assurance that these conditions will be met or waived, that the necessary approvals will be obtained, or that Flextronics and Solectron will be able to successfully consummate the merger as currently contemplated under the merger agreement or at all. In addition, on June 4, 2007, a purported class action complaint was filed in the Superior Court of the State of California, County of Santa Clara, alleging breach of fiduciary duty of the directors of Solectron and seeking to enjoin the merger. See the section entitled “The Merger — Legal Proceedings Relating to the Merger” beginning on page 81 of this joint proxy statement/prospectus.

 

If the merger is not consummated:

 

 

Additionally, the announcement of the pending merger may lead to uncertainty for Flextronics and Solectron’s employees and some of Flextronics and Solectron’s customers and suppliers.

This uncertainty may mean:

 

 

The occurrence of any of these events individually or in combination could materially and adversely affect Flextronics and Solectron’s results of operations and their respective stock prices.

 

The termination fee and the restrictions on solicitation contained in the merger agreement may discourage other companies from trying to acquire Solectron.

 

Until the completion of the merger (with some exceptions), Solectron is prohibited from initiating or engaging in discussions with third parties regarding some types of extraordinary transactions, such as a merger, business combination or sale of a material amount of assets or capital stock. In addition, Solectron has agreed to pay a termination fee in the amount of $100.0 million to Flextronics under specified circumstances described more fully in the section entitled “The Merger Agreement — Termination of the Merger Agreement and Termination Fees” beginning on page 106 of this joint proxy statement/prospectus. These provisions could discourage other companies from trying to acquire Solectron even though those other companies might be willing to offer greater value to Solectron stockholders than Flextronics has offered in the merger.

 

The termination fee contained in the merger agreement may discourage other companies from trying to acquire Flextronics.

 

Flextronics has agreed to pay a termination fee in the amount of $100.0 million to Solectron in connection with a third-party acquisition of Flextronics under specified circumstances described more fully in the section entitled “The Merger Agreement — Termination of the Merger Agreement and Termination Fees” beginning on page 106 of this joint proxy statement/prospectus. This termination fee could discourage other companies from trying to acquire Flextronics, even though those other companies might be willing to offer greater value to Flextronics shareholders than Flextronics could realize through effecting the merger.

 

Flextronics and Solectron are subject to contractual obligations while the merger is pending that could restrict the manner in which they operate their respective businesses.

 

The merger agreement restricts Solectron from making certain acquisitions and taking other specified actions without the consent of Flextronics until the merger occurs. The merger agreement also restricts Flextronics from taking certain specified actions without the consent of Solectron until the merger occurs. These restrictions may prevent Flextronics and/or Solectron from pursuing business opportunities that may arise prior to the completion of the merger. Please see the sections entitled “The Merger Agreement — Solectron’s Conduct of Business Before Completion of the Merger” beginning on page 91 of this joint proxy statement/prospectus and “The Merger Agreement — Flextronics’s Conduct of Business Before Completion of the Merger” beginning on page 94 of this joint proxy statement/prospectus for a description of these restrictions.

 

The failure of Solectron to obtain certain consents related to the merger could give third parties the right to terminate or alter existing contracts, declare a default under existing contracts, or otherwise result in liabilities of the combined company to third parties.

 

Certain agreements between Solectron and its lenders, suppliers, customers or other business partners require the consent or approval of these other parties in connection with the merger. Solectron has agreed to use reasonable best efforts to secure any necessary consents and approvals requested by Flextronics. However, Solectron may not be successful in obtaining all necessary consents or approvals, or if the necessary consents are obtained, they may

not be obtained on favorable terms. If these consents and approvals are not obtained, the failure to have obtained such consents or approvals could give third parties the right to terminate or alter existing contracts, declare a default under existing contracts, demand payment on outstanding obligations or result in some other liability of the combined company to such third parties, which in each instance could have a material adverse effect on the business and financial condition of the combined company after the merger.

 

Flextronics and Solectron expect to incur significant costs associated with the merger.

 

Flextronics and Solectron expect to incur significant costs associated with completing the merger. Flextronics believes that it may incur charges to operations, which are not currently reasonably estimable, in the quarter in which the merger is completed or the following quarters, to reflect costs associated with integrating the businesses and operations of Flextronics and Solectron. There can be no assurance that Flextronics will not incur additional charges in subsequent quarters to reflect additional costs associated with the merger.

 

Flextronics may not realize the expected benefits of the merger due to difficulties integrating the businesses, operations and product lines of Flextronics and Solectron.

 

Flextronics believes that the acquisition of Solectron will result in certain benefits, including certain cost and operating synergies and operational efficiencies. However, Flextronics’s ability to realize these anticipated benefits will depend on a successful combination of the businesses of Flextronics and Solectron. The integration process will be complex, time-consuming and expensive and could disrupt Flextronics’s business if not completed in a timely and efficient manner. The combined company may not realize the expected benefits of the merger for a variety of reasons, including but not limited to the following:

 

 

Uncertainties associated with the merger may cause a loss of employees and may otherwise materially adversely affect the businesses of Flextronics and Solectron, and the future business and operations of the combined company.

 

The combined company’s success after the merger will depend in part upon the ability of the combined company to retain key employees of Flextronics and Solectron. Current and prospective employees of Flextronics and Solectron may be uncertain about their roles with the combined company following the merger, which may have a material adverse affect on the ability of each of Flextronics and Solectron to attract and retain key management, sales, marketing, technical and other personnel. In addition, key employees may depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the combined company following the merger. The loss of services of any key personnel or the inability to hire new personnel with the requisite skills could restrict the ability of the combined company to develop new products or enhance existing products in a timely matter, to sell products to customers or to manage the business of the combined company effectively.

 

The combined company’s increased debt may create limitations.

 

Flextronics estimates that it will require up to approximately $1.9 billion to pay the cash portion of the merger consideration, including acquisition and financing related costs, assuming holders of 50% of Solectron’s

outstanding shares elect to receive cash or approximately $700 million less if holders of 30% of Solectron’s outstanding shares elect to receive cash. In addition, upon consummation of the merger, the surviving corporation will be required to offer to repurchase Solectron’s outstanding $150 million in 8.00% Senior Subordinated Notes due 2016 and $450 million in 0.5% Convertible Senior Notes due 2034 at a price of 101% and 100%, respectively, of the principal amount of the notes outstanding, plus accrued and unpaid interest up to, but excluding, the date of repurchase.

 

Following the acquisition, the combined company is expected to have approximately $3.3 billion (assuming 70% of Solectron’s outstanding shares elect to receive Flextronics ordinary shares) to $4.0 billion (assuming 50% of Solectron’s outstanding shares elect to receive cash) in total debt outstanding, and a higher debt to capital ratio than that of Flextronics on a stand-alone basis. This increased indebtedness could limit the combined company’s flexibility as a result of debt service requirements and restrictive covenants, and may limit the combined company’s ability to access additional capital or execute its business strategy.

 

Acquisitions or investments could disrupt the combined company’s business, harm its financial condition and potentially dilute the ownership of its stockholders.

 

Each of Flextronics and Solectron has made, and the combined company may continue to make, acquisitions in order to enhance its business. Acquisitions involve numerous risks, including problems combining the purchased operations, technologies or products, unanticipated costs, diversion of management’s attention from its core businesses, adverse effects on existing business relationships with suppliers and customers, risks associated with entering markets in which the combined company has no or limited prior experience and potential loss of key employees. The integration of acquired businesses has been, and will continue to be, a complex, time-consuming and expensive process. There can be no assurance that the combined company will be able to successfully integrate all of the businesses, products, technologies or personnel that it might acquire, including those acquired upon completion of the merger. If the information and communication systems, operating procedures, financial controls and human resources practices used by the combined company are not quickly and efficiently adopted by acquired businesses, the business and financial condition of the combined company may be adversely affected.

 

Flextronics and Solectron have also made investments in order to enhance their business and the combined company may in the future also make investments in complementary companies, products or technologies. In connection with any such investments or acquisitions, the combined company could issue stock that would dilute its then current stockholders’ percentage ownership, incur debt, assume liabilities, incur amortization expenses related to purchases of intangible assets, or incur large and immediate write-offs.

 

If the combined company does not successfully anticipate market needs and develop products and product enhancements that meet those needs, or if those products do not gain market acceptance, the combined company may not be able to compete effectively and its ability to generate revenues will suffer.

 

The combined company cannot ensure that it will be able to anticipate future market needs or be able to develop new products or product enhancements to meet such needs or to meet them in a timely manner. If the combined company fails to anticipate the market requirements or to develop new products or product enhancements to meet those needs, such failure could substantially decrease market acceptance and sales of its present and future products, which would significantly harm its business and financial results. Even if the combined company is able to anticipate future market needs and develop and commercially introduce new products and enhancements to meet those needs, there can be no assurance that new products or enhancements will achieve widespread market acceptance. Any failure of the combined company’s products to achieve market acceptance could adversely affect its business and financial results.

 

The combined company’s products may contain defects.

 

The products of Flextronics, Solectron and the combined company may contain undetected defects, errors or failures. These products can only be fully tested when deployed in commercial applications and other equipment.

Consequently, customers may discover errors after the products have been deployed. The occurrence of any defects, errors or failures could result in:

 

 

Any of these occurrences could also result in the loss of or delay in market acceptance of products and loss of sales, which could negatively affect the business and results of operations of the combined company. As the combined company’s products become even more complex in the future, this risk may intensify over time and may result in increased expenses.

 

If the combined company’s new product development and expansion efforts are not successful, results of operations may be adversely affected.

 

Each of Flextronics and Solectron is currently developing, and Flextronics expects that the combined company will continue to develop, products in new areas and the combined company may seek to expand into additional areas in the future. The efforts of the combined company to develop products and expand into new areas may not result in sales that are sufficient to recoup its investment, and it may experience higher costs than anticipated. For example, the combined company may not be able to manufacture products at a competitive cost, may need to rely on new suppliers or may find that the development efforts are more costly or time consuming than anticipated. Development of new products often requires long-term forecasting of market trends, development and implementation of new or changing technologies and a substantial capital commitment. There can be no assurance that the products that the combined company selects for investment of its financial and engineering resources will be developed or acquired in a timely manner or will enjoy market acceptance. In addition, the combined company’s products may support protocols that are not widely adopted and it may have difficulties entering markets where competitors have strong market positions.

 

Both Flextronics’s and Solectron’s quarterly results are inherently unpredictable and subject to substantial fluctuations and, as a result, the combined company may fail to meet the expectations of securities analysts and investors, which could adversely affect the trading price of its common stock.

 

The combined company’s revenues and operating results may vary significantly from quarter to quarter due to a number of factors, many of which are outside of its control and any of which may cause its stock price to fluctuate.

 

The factors that may impact the unpredictability of its quarterly results include limited visibility into customers’ spending plans, changing market conditions, including bankruptcies and similar negatives conditions and events affecting customers and potential customers, a change in the mix of customer’s products, and sales and implementation cycles.

 

As a result, Flextronics and Solectron each believe that quarter-to-quarter comparisons of their respective operating results are not necessarily a good indication of what the combined company’s future performance will be. It is likely that in some future quarters, operating results of the combined company may be below the expectations of securities analysts and investors in which case the price of Flextronics ordinary shares may decline.

 

The combined company may face uncertainties related to the effectiveness of internal controls.

 

Public companies in the United States are required to review their internal controls over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002. Any system of controls over financial reporting, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met; however, the design of any control system is based in part upon certain assumptions about the

likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will achieve its stated goal under all potential future conditions, regardless of how remote.

 

Each of Flextronics’s and Solectron’s management has determined, and each of their respective independent registered public accounting firms have attested, that their respective internal controls were effective as of the end of their most recent fiscal years; however, during the course of integrating Solectron’s business, deficiencies, weaknesses or needed improvements or enhancements to the internal controls of the combined company may arise or be identified. Correcting these deficiencies or weakness and implementing any needed improvements and enhancements could require the combined company to divert substantial resources, including management time, from other activities. The failure to achieve and maintain the adequacy of the combined company’s disclosure controls and procedures and/or its internal controls could result in a determination by management and the combined company’s independent registered public accounting firm that the combined company’s internal controls are ineffective. If internal controls over financial reporting are not considered adequate, the combined company may experience a loss of public confidence, which could have an adverse effect on its business and stock price.

 

The combined company may take substantial restructuring charges in connection with the merger, which may have a material adverse impact on operating results.

 

As part of combining the two companies, Flextronics expects to incur significant restructuring costs during the year commencing with the closing of the acquisition. The financial results of the combined company may be adversely affected by cash expenditures and non-cash charges incurred in connection with the restructuring and integration activities. These costs relate to restructuring and integration activities centered around the global footprint rationalization and elimination of redundant assets or unnecessary functions and include retention bonuses, the amounts of which cannot be currently estimated as management of Flextronics has not yet determined all of the restructuring activities. Certain liabilities associated with these restructuring activities will be recorded as liabilities assumed from Solectron, with a corresponding increase in goodwill and no impact on operating results. Further, Flextronics and Solectron have historically recognized substantial restructuring and other charges resulting from reduced workforce and capacity at higher-cost locations, and the consolidation and closure of several manufacturing facilities, including related impairment of certain long-lived assets. If the combined company is required to take additional restructuring charges in the future, it could have a material adverse impact on operating results, financial position and the cash flows of the combined company.

 

Flextronics International Ltd., referred to in this joint proxy statement/prospectus as Flextronics, is a leading provider of advanced design and electronics manufacturing services (EMS) to original equipment manufacturers (OEMs) in the following markets:

 

 

Flextronics is one of the world’s largest EMS providers, with revenues from continuing operations of $18.9 billion in fiscal year 2007. As of March 31, 2007, Flextronics’s total manufacturing capacity was approximately 17.7 million square feet in over 30 countries across four continents. Flextronics has established an extensive network of manufacturing facilities in the world’s major electronics markets (Asia, the Americas and Europe) in order to serve the growing outsourcing needs of both multinational and regional OEMs. In fiscal year 2007, Flextronics’s net sales in Asia, the Americas and Europe represented 61%, 22% and 17% of its total net sales, respectively.

 

Flextronics’s portfolio of customers consists of many of the technology industry’s leaders, including Casio, Cisco Systems, Dell, Eastman Kodak, Ericsson, Hewlett-Packard, Kyocera, Microsoft, Motorola, Nortel, Sony-Ericsson and Xerox.

 

Flextronics is a globally recognized leading provider of end-to-end, vertically integrated global supply chain services through which it designs, builds, and ships a complete packaged product for its OEM customers. These vertically integrated services increase customer competitiveness by delivering improved product quality, leading manufacturability, improved performance, faster time-to-market and reduced costs. Flextronics remains firmly committed to the competitive advantage of vertical-integration, along with the continuous development of its design capabilities in each of Flextronics’s major product categories. Flextronics’s OEM customers leverage its services to meet their requirements throughout their products’ entire product life cycle. Flextronics’s services include:

 

 

 

Flextronics believes that these vertically integrated capabilities provide it with a competitive advantage in the market for designing and manufacturing electronic products for leading multinational and regional OEMs. Through these services and capabilities, Flextronics simplifies the global product development process and provides meaningful time and cost savings for its customers.

 

Flextronics was incorporated in the Republic of Singapore in May 1990. Its registered office address is located at One Marina Boulevard, #28-00, Singapore 018989, and its U.S. corporate headquarters is located at 2090 Fortune Drive, San Jose, California, 95131. Flextronics’s website is located at www.flextronics.com. Information contained on this website does not constitute part of this joint proxy statement/prospectus.

 

Solectron Corporation, referred to in this joint proxy statement/prospectus as Solectron, provides electronics manufacturing and supply chain services to OEMs around the world. As a value-added contract manufacturing partner to OEMs, Solectron contracts with its customers to build the customer’s products or to provide services related to product design, manufacturing and post-manufacturing requirements. Solectron designs, builds, repairs and services products that carry the brand names of its customers.

 

Solectron serves several electronics products and technology markets. Much of Solectron’s business is related to the following products:

 

 

Solectron’s customer base consists of many of the world’s leading technology companies, such as Cisco Systems, Ericsson, Hewlett-Packard, IBM, Lucent Technologies, Motorola, NCR, NEC, Nortel Networks, Pace, Sun Microsystems and Teradyne.

 

Solectron’s comprehensive range of services are designed to meet customer supply chain needs throughout the product life cycle. Solectron’s services include:

 

 

 

Solectron customizes these services to deliver integrated supply chain solutions to its customers. Solectron offers services that it believes will allow its customers to achieve cost, time and quality advantages that improve their competitiveness and enable them to focus on their core competencies of sales, marketing and research and development. Solectron believes that its services also allow customers to reduce or shift costs and risks associated with manufacturing and supply chain management.

 

Solectron was first incorporated in California in August 1977 and was reincorporated in Delaware in February 1997. Solectron’s principal executive offices are located at 847 Gibraltar Drive, Milpitas, California 95035, and its telephone number is (408) 957-8500. Solectron’s website address is www.solectron.com. Information contained in this website does not constitute part of this joint proxy statement/prospectus.

 

Saturn Merger Corp. is a wholly-owned subsidiary of Flextronics formed on May 29, 2007. Flextronics formed Saturn Merger Corp. solely to effect the merger, and Saturn Merger Corp. has not conducted any business during the period of its existence.

 

Saturn Merger II Corp. is a wholly-owned subsidiary of Flextronics formed on June 29, 2007. Flextronics formed Saturn Merger II Corp. solely to effect the second-step merger, and Saturn Merger II Corp. has not conducted any business during any period of its existence.

 

Flextronics is furnishing this joint proxy statement/prospectus in connection with the solicitation by the board of directors of Flextronics of proxies to be voted at the 2007 annual general meeting of Flextronics shareholders, or at any adjournments thereof, for the purposes set forth in the notice of annual general meeting that accompanies this joint proxy statement/prospectus.