Flex, the contract manufacturer with a reported market value of $33.7 billion, said on Tuesday it will separate its cloud and power infrastructure business into a newly listed company by early 2027, aiming to capitalize on demand tied to artificial intelligence. The transaction, which requires regulatory approvals, is designed to split the company into two distinct entities - an AI data-center infrastructure group and a remaining manufacturing business.
The business being carved out will concentrate on delivering power, cooling and integrated systems for data centers. Flex has not released financial metrics specific to the unit slated for separation: the company did not disclose revenue, profit margins or how debt would be allocated to the new entity. It likewise did not state what ownership stake it would hold in the spun-off company.
Following the separation, Flex said Chief Executive Revathi Advaithi will take the helm of the new SpinCo, while President Michael Hartung will assume the role of chief executive officer for the remaining Flex operations. The company indicated the spin-off is expected to be tax-free to shareholders.
Target timing for the completion of the separation is the first quarter of calendar 2027, but management noted the closing will depend on market conditions and is subject to the usual regulatory approvals. Financial advisory roles for the transaction have been assigned to Citi, PJT Partners and BofA Securities.
Flex also provided a growth outlook for the part of the company that will remain after the spin-off. Excluding the business to be separated, Flex said it expects to be positioned for low-to-mid-single-digit growth. The company did not expand on the drivers behind that projection in its announcement.
The planned split is presented as a strategic effort to monetize Flex's exposure to artificial intelligence by concentrating the cloud and power infrastructure capabilities in a standalone public company. Beyond the leadership appointments, no additional operational details or financial targets for the new data-center infrastructure company were included in the release.
Investors and other stakeholders will need to await further filings and disclosures that typically accompany a separation before they can assess the financial profile of the spin-off, including revenue contribution, profitability and how liabilities will be divided between the two companies.