Flextronics will procure all stocks of Arima's subsidiaries in Japan, Texas and California, and the UK for an extra $59.5 million.

The transaction is expected to be completed in the first quarter of 2008, Arima said.

Currently, Arima's clients, including HP and Dell, contribute around 330,000-350,000 units to notebook shipments each month, said the company.

Flextronics should expand the production capacity up to 500,000 units initially after the take over, while mass production will begin in the later half of 2008, Arima stated.

No other terms of the agreement were disclosed.