SAN JOSE -- Flextronics International today agreed to sell a majority stake in its software development business to private-equity firm Kohlberg Kravis for $900 million. Flextronics expects to receive $600 million in cash consideration and $250 million in notes with a 10.5% paid-in-kind interest coupon which matures in eight years.

Flextronics expects to net $175 million after taxes upon closing, which is expected this summer.
Flextronics will also retain a 15% equity stake in the business, which will operate as an independent software development and solutions company. The purchase price is subject to customary working capital and certain other post-closing adjustments.

Separately, Flextronics announced a stock repurchase of up to $250 million outstanding shares.

Chief executive Michael McNamara said the transaction "is the continuation of our previously announced strategy of focusing on the reacceleration of significant growth opportunities in our core EMS business, which includes design, vertically-integrated manufacturing services, components and logistics."

Chief financial officer Thomas Smach said the company will "invest in working capital to support the rapid increase in growth we expect in our core EMS business."

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