Elcoteq divests its subsidiary in St. Petersburg to Flextronics
Feb 26, 2008
As part of the previously announced action plan to restore the company's profitability and competitiveness, Elcoteq has signed an agreement with Flextronics International GmbH to divest Elcoteq's subsidiary ZAO Elcoteq, in St. Petersburg, Russia. The closing takes place when and provided that the conditions precedent including the competition authorities' approvals have been fulfilled. This is estimated to take approximately 60 days.
The transaction is a share deal, in which the purchaser acquires 100 percent of the shares in Elcoteq's subsidiary in St. Petersburg including the premises and personnel but excluding the existing customer agreements. Elcoteq expects to book a one-time gain of approximately 3 million euros related to the sale on Q2/2008. The deal is estimated to have a positive impact on the operative profitability from Q3/2008 onwards.
The size of the plant is 14,700 square meters. At the end of January 2008, the plant employed 550 people. The plant has mainly produced for the export markets.
St. Petersburg's plant has been loss-making due to the underutilization which has been partially caused by the unfavorable custom duties for component import.
"The divestment of the Russian subsidiary plays a central role in improving Elcoteq's profitability and balance sheet in 2008," says Mr. Jouni Hartikainen, President and CEO of Elcoteq SE.