Solectron, the world's largest contract electronics manufacturers, is proposing to buy NatSteel Electronics.
Singapore-based NatSteel is the world's sixth-largest electronics manufacturing services provider. Solectron is offering $4.53 per share in cash, valuing the deal at around $2.4bn.
It expects to finance a portion of the acquisition through a public offering of common stock and loan notes.
If successful, the company will have combined sales of $16bn - made of Solectron's sales of $14.1bn against Natsteel's $1.9bn - helping Solectron go some way to achieving full year sales of $20bn next year.
Solectron has received undertakings from 43% of NatSteel Electronics shareholders that they will tender their shares under the offer. They are held by the largest shareholder of NatSteel Electronics - separately traded NatSteel Ltd., as well as key members of NatSteel Electronics' management team, among others.
Solectron must, however, secure more than 50% of NatSteel Electronics shares. As well as winning the approval of NatSteel Ltd. shareholders to sell their shares, the deal needs to satisfy regulatory reviews.
Koichi Nishimura, Solectron's chairman, president and CEO, said: "The trend of original equipment manufacturers to outsource their manufacturing and supply-chain needs is now emerging in the Asia/Pacific region. By acquiring NatSteel Electronics, we at Solectron would further strengthen our presence in this region, expand our capacity and solidify our leadership role in bringing the benefits of outsourcing to companies in Asia."
Solectron hopes to complete the offer by the end of the year.