HELSINKI -- Elcoteq will sell its Russian subsidiary ZAO Elcoteq to Flextronics. The deal includes Elcoteq's St Petersburg plant, and is expected to close in 60 days. Financial terms were not specifically noted, although Elcoteq said it would book a one-time gain of about $4.5 million in its second quarter.

Under terms of the deal, Flextronics will get the plant site -- reportedly 48,000 sq. ft. -- and staff. Elcoteq will retain the customer accounts. As of January, the plant employed 550 workers.

Elcoteq had previously announced it would seek a buyer for the unit as the company has consistently lost money on its Russian operations. The EMS firm is trying to reduce its annual costs by $104 million to $119 million as it seeks to rebound from the loss of certain Nokia business.

"The divestment of the Russian subsidiary plays a central role in improving Elcoteq's profitability and balance sheet in 2008," said Jouni Hartikainen, President and CEO of Elcoteq SE, in a statement.

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