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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): NOVEMBER 22, 1999
THE DII GROUP, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 0-21374 84-1224426
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
6273 MONARCH PARK PLACE NIWOT, COLORADO 80503
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (303) 652-2221
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ITEM 5. OTHER EVENTS.
On November 22, 1999, Flextronics International Ltd., a Singapore
company ("Flextronics"), The DII Group, Inc., a Delaware corporation ("DII"),
and Slalom Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Flextronics ("Merger Sub"), entered into an Agreement and Plan of
Merger (the "Merger Agreement"). Subject to the terms and conditions of the
Merger Agreement, Merger Sub will be merged with and into DII (the "Merger"),
with DII surviving the Merger and becoming a wholly-owned subsidiary of
Flextronics. At the effective time of the Merger, each outstanding share of
DII's common stock, par value $0.01 per share ("DII Common Stock"), will be
exchanged for 0.805 of an ordinary share of Flextronics, par value S$0.01 per
share ("Flextronics Ordinary Shares"), adjusted to 1.61 Flextronics Ordinary
Shares after giving effect to Flextronics' planned one-for-one stock dividend in
the form of a bonus issue, the Singapore equivalent of a stock dividend (the
"Exchange Ratio"). Options and other rights to purchase DII Common Stock will be
assumed by Flextronics and converted into options and other rights to purchase
Flextronics Ordinary Shares, and the exercise price and number of Flextronics
Ordinary Shares subject to these options and other rights will be adjusted
according to the Exchange Ratio.
Upon the closing of the Merger, Michael Marks will continue as
Flextronics' Chairman and Chief Executive Officer, and Ronald R. Budacz, Chief
Executive Officer of DII, or a person selected by Mr. Budacz with the consent of
Flextronics, will become Deputy Chairman of Flextronics.
The Merger is intended to be accounted for as a pooling of
interests, and is subject to various closing conditions, including clearance
under the Hart-Scott-Rodino Antitrust Improvements Act and approval by the
shareholders of Flextronics and the stockholders of DII.
In connection with the execution of the Merger Agreement,
Flextronics and DII entered into a stock option agreement (the "Stock Option
Agreement") pursuant to which DII granted to Flextronics an option to purchase
up to 19.9% of the outstanding shares of DII Common Stock (the "Option"). The
Option becomes exercisable upon the occurrence of certain events specified in
the Stock Option Agreement. In addition, Flextronics and DII also each entered
into voting agreements with certain officers and directors of DII and
Flextronics, respectively. Under the voting agreements, these officers and
directors agreed to vote their shares in favor of the Merger and to waive
certain rights.
A joint press release announcing these transactions is attached to this
Report as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
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Exhibit Number Description
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99.1 Text of Press release, dated November 22, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: December 3, 1999
The DII Group, Inc.
By: /s/ Thomas J. Smach
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Name: Thomas J. Smach
Title: Chief Financial Officer
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EXHIBIT INDEX
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Exhibit Number Description
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99.1 Text of Press release, dated November 22, 1999.
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Exhibit 99.1
SAN JOSE, Calif. and NIWOT, Col., Nov. 22 -- Flextronics International
Ltd. (Nasdaq: FLEX) and The Dii Group, Inc. (Nasdaq: DIIG) today jointly
announced the signing of a definitive merger agreement for a tax-free,
stock-for-stock merger. Flextronics and The Dii Group are both leading providers
of electronics manufacturing and design services, each operating through a
global operations network in the Americas, Asia/Pacific and Europe. The
combination enables Flextronics to expand its printed circuit board operations
and design services, while providing additional geographic locations and
customer relationships. For The Dii Group this merger enables its stockholders
to participate in the expanded growth that top tier electronics manufacturing
service providers are experiencing. Based on Flextronics' closing price of
$81.25 on November 19, 1999, the transaction is valued at approximately $65.41
per share of Dii common stock, or more than $2.4 billion in the aggregate. As a
result, this transaction is the largest combination in the electronics
manufacturing services industry. In addition, on November 20, 1999, the Board of
Directors of Flextronics approved a two-for-one stock split, which will be
completed prior to the closing of the merger.
Under the agreement, Dii shareholders will receive 0.805 Flextronics
ordinary shares for each share of The Dii Group (1.61 Flextronics ordinary
shares after giving effect to Flextronics' planned two-for-one stock split),
resulting in current Dii shareholders owning approximately 34% of the combined
Company. The merger is intended to be accounted for as a pooling of interests,
and is subject to approval by shareholders of both companies, regulatory
approvals and other customary conditions. Executives and directors of both
companies have agreed to vote their shares in favor of the proposed transaction.
The companies anticipate that the transaction will be completed in early April
2000.
The combined Company will operate under the Flextronics International
name. The companies on a combined basis, had sales for the last twelve months of
over $3.8 billion.
The combined Company is the fourth largest provider of electronics
manufacturing services, with strengths in telecommunications, consumer
electronics, PCB fabrication, and design services. The Dii Group will bring to
the combined Company manufacturing services from 22 strategic locations in
China, Southeast Asia, North and South America and Europe. As a result of the
transaction, Flextronics will add over 12,000 employees and over 2.9 million
square feet of manufacturing and design facilities. Flextronics will gain a
manufacturing presence in Ireland, Germany and the Czech Republic, and will
expand its PCB assembly capacity in China, Malaysia, Mexico, Austria, and the
United States. Dii's facilities also include significant advanced PCB
manufacturing capabilities in California, Minnesota, Texas, Germany, China and
Brazil. In addition, Flextronics will gain design and semiconductor centers in
California, Arizona, India and Israel.
Michael E. Marks, Chairman and Chief Executive Officer of Flextronics
stated, "The trend in outsourcing has been growing at an astounding rate. As a
global, world-class EMS provider, you must have the speed and flexibility to
offer a comprehensive set of custom design and manufacturing services. Our
strategic merger with the Dii Group will expand and strengthen our ability to
provide an extensive global network of facilities and capabilities to meet our
OEM customers growing needs. Dii's strong management team and business
philosophy truly
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complements our core business strategies and will significantly contribute to
the expansion of our position in the industry."
Ronald R. Budacz, Chairman and Chief Executive Officer of The Dii Group
stated, "We have made great strides in achieving our business initiatives. The
Dii Group has a history of operational excellence, strong organic growth and a
cautious yet aggressive acquisition strategy. This merger is a good strategic
fit for both organizations since it allows us to offer our customers a more
comprehensive network of services and capabilities. It also brings together an
impressive management team that is capable of driving growth and manufacturing
excellence."
SalomonSmithBarney and Broadview International LLC acted as financial
advisors and provided fairness opinions to The Dii Group. Fenwick & West LLP is
counsel to Flextronics International Ltd. and Curtis, Mallet-Prevost, Colt &
Mosle LLP is counsel to The Dii Group.
About Flextronics
Flextronics is a global full-service supplier of a full spectrum of
value-added Electronic Manufacturing Services. Its global original equipment
manufacturer (OEM) customers include leaders in fast-growth communications,
computers, medical and consumer markets where innovation, time-to-market,
product miniaturization and cost reduction are paramount. For more information,
please visit the Flextronics Web site at http://www.flextronics.com.
About The Dii Group
The Dii Group is a leading value-added electronics design and
manufacturing service provider, which operates through a global network of
companies in South America, North America, Europe and Asia. The Dii Group serves
the electronics industry through its four core competencies: semiconductors;
printed circuit boards; circuit board and finished product assembly and
distribution; and process control technologies. Its Web site can be reached by
accessing "www.diigroup.com" to view recent press releases, Company information,
and financial data relating to The Dii Group.
This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These forward-looking statements involve a
number of significant risks and uncertainties that may cause results to vary
from expectations. In particular, while the companies have executed a definitive
merger agreement, there is no assurance that the transaction will receive
shareholder and regulatory approval and be completed. Additional risks include
unexpected costs in connection with the combination, including diversion of
management time; risks relating to integrating Flextronics and The Dii Group;
risks involved in retaining and motivating key personnel; and difficulties in
obtaining any of the expected benefits of the combination. Other risks and
uncertainties relating to the ongoing operations of the Flextronics are
described in Flextronics' most recent annual report on Form 10-K for the fiscal
year ended March 31, 1999 and quarterly report on Form 10-Q for the quarter
ended September 25, 1999 filed with the Securities and Exchange Commission
(SEC); and risks and uncertainties relating to the ongoing operations of The Dii
Group are described in The Dii Group's most recent annual report on Form 10-K
for the fiscal year ended January 3, 1999 and quarterly report on Form 10-Q for
the quarter ended October 3, 1999 filed with the SEC.
