SAN JOSE -- Flextronics will acquire International DisplayWorks, a designer and manufacturer of LCDs and other components for handheld and industrial products, in an all-stock deal valued at $300 million.

The transaction is subject to customary closing conditions, including IDW stockholder approval and certain regulatory approvals, and is expected to close in the fourth quarter.

In a press statement, Flextronics chief executive Mike McNamara said, "IDW augments our strategy of providing vertically integrated solutions by adding LCD design and manufacturing capabilities."

Flextronics said it will combine IDW's LCD operations with its own group for camera modules, TV tuners and Wifi and TFT module assembly  to create a new business unit within Flextronics' Components Division. The new division will employ about 8,000 workers across six factories.

For its first fiscal 2006 quarter ended April 30, its most recently reported period, IDW posted revenues of $27.2 million, up 20.3% over the year before. It was IDW's 11th consecutive quarter of profitability. At that time the company guided for third fiscal quarter revenue of $30 million to $36 million.

Flextronics expects the transaction to be neutral to diluted EPS expectations during the first 12 months and accretive thereafter.

The exchange ratio will be calculated using Flextronics' average daily closing share price for the 20 trading days ending on the fifth trading day immediately preceding closing.

IDW can terminate the agreement if Flextronics' average share price falls 15% or more below $11.73, subject to a Flextronics top-up right.