Flextronics has agreed to spend a massive $3.6bn to acquire rival contract electronics firm Solectron.
The deal will be done in a mixture of cash and stock with Solectron becoming a subsidiary of Flextronics. Solectron shareholders will hold a stake of between 20 and 26 per cent in the new company.
Flextronics is the world’s biggest contract electronics manufacturer and Solectron the second biggest.
"By joining forces, we expect the increased scale will enable us to further extend our market segment reach and leverage an increased vertical integration opportunity, realise significant cost savings, and better serve the needs of our combined customers, employees and shareholders," Flextronics chief executive Mike McNamara said in a statement.
Citigroup Global Markets has committed backing of $2.5bn to fund the cash portion of the acquisition. The buyout is expected to close by the end of the year with the approval of shareholders and regulators.