Flex to Acquire Electrical Power Products to Boost Power Capabilities

Core Insights - Flex Ltd. has agreed to acquire Electrical Power Products, Inc. (EP2) for approximately $1.1 billion in cash, with net value estimated at $1.0 billion after tax benefits [1][2][9] - The acquisition is projected to be accretive to adjusted earnings per share in the first full fiscal year following the closing [1][9] - EP2 is expected to generate around $323 million in revenues for the fiscal year ending March 31, 2026, with anticipated double-digit organic growth and a mid- to high-teens adjusted EBITDA margin [2][9] Acquisition Details - The deal enhances Flex's presence in high-growth markets related to grid modernization, electrification, and engineered power solutions [3][9] - The transaction is expected to close in the first quarter of Flex's fiscal 2027, pending customary closing conditions [2] - Citi is serving as the exclusive financial advisor to Flex, while RA Capital Associates LLC is advising EP2 [4] Strategic Implications - The acquisition will expand Flex's capabilities in supporting the modernization of U.S. electrical infrastructure, addressing rising demand and system complexity [5] - Flex's acquisition strategy has been robust, with recent deals enhancing its capabilities in data center cooling and critical power solutions [6] - The company is scaling its global capacity, with new assets in Poland to boost compute and cooling capabilities across EMEA [6] Financial Outlook - For the fourth quarter of fiscal 2026, Flex expects revenues to be between $6.75 billion and $7.05 billion, with Reliability Solutions revenues projected to increase in the low double-digit to mid-teens range [7] - Flex's shares have surged 83.1% over the past year, outperforming the Zacks Electronics - Miscellaneous Products industry's growth of 52.3% [8]