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Arima to sell its notebook, server lines to Flexronics

Arima Computer Corp (華宇電腦) said yesterday that it had signed a letter of intent with Flextronics International, Singapore's electronics manufacturing service provider, to sell its unprofitable notebook computer and server manufacturing equipment and facilities for US$191.5 million.

In a filing to the Taiwan Stock Exchange, Arima said it planned to sell its laptop and server assets in Taiwan and China and subsidiaries in Japan, the US and UK to Flextronics Computing Sales and Marketing Ltd.

"The company plans to sell notebook and server assets and operations in order to help it focus on other businesses with high value and growth potential," Arima said in the filing.

The notebook computer maker said it lacked competitiveness in those two areas, where orders went mostly to top players.

Arima said it would see a NT$20 billion (US$604.9 million) reduction in its annual revenues in the wake of the deal, the Chinese-language online news agency cnyes.com reported.

Some 3,500 Arima employees would be allocated to Flextronics after the transaction, the report said.

Arima makes 350,000 laptop computers for customers, including US PC vendor Gateway Inc and 20,000 servers a month, the report said.

The deal will need the approval of Arima's shareholders and the Ministry of Economic Affairs' Investment Commission.

Based on the preliminary agreement it reached with Flextronics, Arima said it would also sell its shares in subsidiaries such as Arima Computer (Japan) Corp, Arima Computer (Texas) Corp, Arima Computer (UK) Ltd and Arima Computer (California) Corp to Flextronics Computing Sales and Marketing Ltd.

Both sides will have to sign a formal contract within the next 45 days, Arima said.

It has scheduled an extraordinary shareholder meeting at its Taoyuan headquarters on Nov. 12 to approve the deal, Arima said in a separate filing to the Taiwan Stock Exchange.

Arima's asset and share sales were announced after the close of the local market yesterday.

Its shares rose NT$0.23 or 2.8 percent to close at NT$8.45 yesterday, compared to an increase of 0.63 percent in the TAIEX.

Arima shares have risen 15.13 percent this year.
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