Flex (FLEX) To Divest Interests In Multek Operation To MFLEX

Flex Ltd. (NASDAQ:FLEX) recently signed a definite agreement to divest its US-based Multek operation to Multi-Fineline Electronix Inc. ("MFLEX"), a wholly-owned subsidiary of Suzhou Dongshan Precision Manufacturing Co. ("DSBJ").

Per the deal, Flex will sell all of the equity interests of its China-based business subsidiary, Multek to MFLEX in an all-cash deal. Upon completion, Multek will continue to operate with its current name and location in Zhuhai, China.

The divestment deal will result in a payment of $273 million to Flex. The transaction is subject to regulatory clearance and is expected to close in the third quarter of calendar year 2018. The sales proceeds will be used toward developing core assets and also strengthen balance sheet. Such asset dropdowns and reduction of debts surely bodes well for the company’s growth.

Per president of Multek "Multek has built a strong reputation for its industry-leading capabilities that range from simple Low Layer Count rigid PCBs, to complex 46-Layer PCBs, High Density Interconnect (HDI) Flexible Printed Circuits, and Rigid-Flex PCBs.”

It is important to note that this strategic acquisition is expected to enhance DSBJ product offerings to customers and solidify its position as a global technology company.

Price Movement

Shares of Flex have gained 1.49% in the past six months as compared with 5.27% loss of the industry it belongs to.

Factors in Favor of Flex

Flex had reported stellar fiscal third-quarter 2018 results, wherein both the top and bottom line surpassed the Zacks Consensus Estimate. Revenues also increased year over year primarily attributed to robust performance across most segments. The top line benefited from new business wins driven by the Sketch-to-Scale initiative as well as continued development of the long-term strategic partnership with Nike (NYSE:NKE) .

Zacks Rank & Other Stocks to Consider

Flex carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader technology sector are Micron Technology (NASDAQ:MU) and NVIDIA Corporation (NASDAQ:NVDA) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Micron and NVIDIA is projected to be 10% and 10.25%, respectively.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>