Will Flex's Top-Line Benefit From Crown Technical Systems Buyout?

Core Viewpoint - Flex Ltd. has announced a definitive agreement to acquire Crown Technical Systems for $325 million in an all-cash deal, expected to enhance its presence in rapidly expanding markets, particularly in modular data centers and medium-voltage power distribution [1][2]. Group 1: Acquisition Details - The acquisition is anticipated to be accretive within the first year following completion and is expected to finalize by December 2024, pending regulatory approvals [1]. - Crown Technical Systems is projected to generate around $120 million in revenues for fiscal 2025, with a high-teens EBITDA margin [2]. Group 2: Strategic Importance - The acquisition broadens Flex's power portfolio into the utility power sector, capitalizing on trends in grid modernization and increased energy generation [1]. - Flex aims to support customers facing power, heat, and scalability challenges in the data center industry, aligning with its long-term growth objectives [2]. Group 3: Recent Initiatives - Flex's subsidiary, Anord Mardix, opened a new facility in Dundalk, Ireland, to meet the increasing global demand for reliable data center power solutions [3]. - In May 2024, Flex acquired FreeFlow to expand its service reach in emerging markets, promoting sustainability through second-life products [3]. Group 4: Financial Outlook - Flex is poised to enhance revenue growth in the evolving data center landscape and improve long-term financial performance [4]. - However, revenues in Reliability Solutions are expected to decline in the high single-digit to mid-teens range due to weak macro trends in core industrial sectors [4].