Flextronics plans to capture rival Solectron for $3.6bn in stock and cash.

Flextronics and Solectron construct a diverse range of products from computing systems such as the Xbox and high-end servers to medical devices. So, the proposed tie-up between the two companies means that a wide variety of hardware makers who prefer not to make their own hardware will have one less option. The combined company - say, FlexSol - would bring in more than $30bn per year.

Both company boards have approved the deal, which still hinges on standard approvals.

Flextronics has pitched the acquisition as a way to cut costs and expand its product line. In particular, Singapore-based Flextronics hopes to get its mitts on Silicon Valley-based Solectron's computing and telcoms gear production skills.

The addition of the back-end hardware should complement Flextronics's expertise with consumer electronics and mobile devices.

The companies expect the deal to close by the end of 2007. ®

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