Flextronics Buys HSS in Record Deal

In what could be billed as the largest takeover in the Indian IT sector,
Singapore-based $14.5 bn electronics manufacturing services (EMS) provider
Flextronics International Asia Pacific has signed a definitive agreement with
Hughes Network Systems, a wholly-owned subsidiary of DirecTV, to acquire its
entire ownership stake of 55% in Hughes Software Systems (HSS) at Rs 547 per
share. The $226 million-deal (around Rs 1,017 cr) is subject to regulatory
approval and is expected to close by October 2004. Pursuant to Indian securities
regulations, Flextronics is required to make an open offer on or about June 11,
2004, to purchase an additional 20% of the shares outstanding from the remaining
shareholders at a price not less than Rs 547. There is no obligation for
shareholders to accept this open offer and there is no assurance that any shares
will be offered for sale to Flextronics.

The approximate total purchase price of $226 mn to be paid to HNS, along with
the open offer of $82 million, assuming an offer price of Rs 547, is required to
be funded by Flextronics on the date the open offer is initiated. HNS Mauritius
Holdings and HNS, Inc., the promoters of HSS, executed share purchase agreement
with Flextronics. HSS provides convergent software solutions for fixed and
mobile networks for both voice and data. Its products and services span a
variety of domains, such as optical networks, wireless networks, and satellite
networks, switching systems, convergent networks and broadband networks.

Flextronics has become the first EMS provider to offer embedded and
application software development for telecom infrastructure products and
customers. "This partnership should offer significant opportunities to
cross-sell our respective products and services to a very complimentary telecom
customer base," said Flextronics chief executive officer Michael E Marks in
a press release.

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