Flextronics to Buy International DisplayWorks

Flextronics (FLEX Quote - Cramer on FLEX - Stock Picks) agreed to acquire International DisplayWorks (IDWK Quote - Cramer on IDWK - Stock Picks) for around $300 million in stock.

Singapore-based contract electronics manufacturer Flextronics said it will pay $6.55 a share for Roseville, Calif.-based International DisplayWorks. Flextronics will issue more stock if its shares fall and fewer if its shares rise, subject to limits. If Flextronics shares drop 15% from Friday's close, IDW has the right to terminate the deal. If Flextronics shares rise 15%, it will pay $6.85 a share.

IDW specializes in the manufacture and design of high-quality small-form-factor liquid crystal displays, modules and assemblies for a variety of applications including cell phones, MP3 players, industrial and commercial products, and eventually digital cameras.

The acquisition is expected to close in the fourth calendar quarter of 2006. As a result of the acquisition, IDW will become a wholly-owned subsidiary of Flextronics.

Flextronics said it expects this transaction to be neutral to diluted EPS expectations in the first 12 months and to be accretive thereafter.

Flextronics said it plans to combine IDW's LCD operations with Flextronics' Camera Module Group, TV tuner and WiFi and TFT module assembly operations to create a new business unit within Flextronics' Components Division.