Kohlberg Kravis Roberts, the US-based buyout firm, has agreed to buy the Indian software arm of Nasdaq-listed Flextronics International in a deal valued at US$900m.
KKR had been the favourite to buy Flextronics Software Systems (FSS) as it hired Flextronics’ former chief executive and current non-executive chairman Michael E Marks as a member of the firm in January.
Singapore-based Flextronics will retain 15% of the Indian business and concentrate on its electronics manufacturing services. Flextronics will receive US$600m in cash and hold a US$250m payment-in-kind loan note with a 10.5% coupon issued by KKR. Citigroup and Merrill Lynch are arranging the debt for KKR.
The LBO deal is the largest in India’s technology sector and KKR has been involved in most of the largest technology buyouts, including SunGard, Agilent and Avago.
Flextronics bought FSS from News International-owned DirecTV in June 2004.