Flex Lines Up $2 Billion Axiom Preferred Deal, With A Redemption Guarantee If Spin-Off Slips Past 2027
General Catalyst and Koch Equity Development would buy the preferred stock, and Flex backs a payout at 115% in cash or 125% in shares.
Flex agreed to sell $2.0 billion of Series A Convertible Preferred Stock in Axiom, its Cloud and Power Infrastructure unit, to General Catalyst, Koch Equity Development and co-investors, an 8-K shows. The deal values Axiom at $37.5 billion on an initial enterprise-value basis, and Flex guarantees a redemption payment if the planned spin-off is not completed by December 31, 2027.
What the 8-K says
The investors will buy 200,000 preferred shares at $10,000 each in a private placement, for an aggregate $2,000,000,000. The agreement is dated October 2, and Flex issued a press release on Monday. General Catalyst also gets the right to nominate one Axiom director after the separation.
The preferred pays a 10.0% annual cash dividend before the spin-off. Afterward it pays 6.0% in cash or 7.0% if paid in kind, meaning in additional securities, with increases after the fifth anniversary of the separation.
If the spin-off misses the deadline, Axiom must redeem the shares at 115% of the purchase price in cash or 125% in Flex ordinary shares. Cash dividends already paid are subtracted, and the price is raised if needed so investors keep the same amount after an assumed 25.5% tax rate. Flex guarantees the payment.
Any part of the redemption price left unpaid on the redemption date accrues interest at 12% a year. If Flex shares are used, Axiom and the investors are to try to agree the share count before December 1, 2027, and Flex agreed to provide registration rights.
What it changes
The money is tied to a deal already in motion. A Flex subsidiary signed an agreement on September 3 to buy EPC Power, which is expected to close in the fourth quarter of 2026 and join Axiom before the spin-off. The investment is connected to that pending acquisition.
For Flex holders, the guarantee is the key term. If the separation slips, Flex stands behind a payout that could be settled in its own ordinary shares. Axiom filed its Form 10 registration with the SEC on September 15, and Flex shares closed at $116.61 on Friday, before the disclosure.
What to watch
Closing requires expiration of the Hart-Scott-Rodino antitrust waiting period and other regulatory approvals. Flex also intends to file a proxy statement seeking shareholder approval of the spin-off, which it expects to complete in the first quarter of 2027.
The next hard date in the filing is December 31, 2027: miss it, and the redemption clock starts.
Sources
- 8-K Filing — FLEX LTD. (FLEX) — SEC EDGAR
- Exhibit d123485dex991.htm — FLEX LTD. 8-K exhibit — SEC EDGAR
- Flex Ltd. (FLEX) stock price, news, quote and history - Yahoo Finance — Yahoo Finance
