KKR to Acquire Flextronics' Software Development and Solutions Business

KKR to Acquire Flextronics' Software Development and Solutions Business

April 17, 2006

Acquisition is KKR's First Investment in India

    MENLO PARK and PALO ALTO, Calif., April 17
/Xinhua-PRNewswire/ -- Kohlberg Kravis Roberts & Co.
("KKR") today announced that an affiliate of KKR
has signed a definitive agreement to acquire the software
development and solutions business ("the software
business") of Flextronics International Ltd. (Nasdaq:
FLEX) in a transaction valued at approximately $900
million.  Flextronics will retain a 15% equity stake in the
software business and continue as an important business
partner and customer.

    The software business is headquartered in Palo Alto,
California, with operations located predominantly in India
under the banner of Flextronics Software Systems
("FSS"). The business is unique in its ability to
deliver communications solutions that stretch from the
network infrastructure to end user devices. As a key
research and development partner to top tier communications
companies worldwide, the business has developed a
sophisticated global delivery model.  Comprised of a
software solutions group and a strategic design consulting
group, the business is experiencing rapid growth and has
approximately 6,100 employees worldwide. In addition to
operations in the United States and India, it has a
significant presence in Eastern Europe.

    Following completion of the transaction, CEO Ash
Bhardwaj, FSS President Arun Kumar, and the existing
management team will continue to lead the software
business.  It will operate under a new name, which has yet
to be selected. 

    The acquisition is KKR's first investment in India and
second investment in Asia, following its 2005 investment in
Avago Technologies, the former Semiconductor Products Group
of Agilent Technologies.  It is also believed to be the
largest leveraged buyout and technology investment in India
to date.

    Adam H. Clammer, a Member of KKR, said, "Our
investment in Flextronics' software development and
solutions business is an outstanding opportunity to create
value in a high-growth sector.  Led by a world-class
management team, the software business has an unmatched
record of success in the delivery of communications
technology.  We believe the business is well positioned to
build on the strong foundation it has developed in its
markets."

    James H. Greene, Jr., a Member of KKR, added,
"This transaction demonstrates the strength of the
global investment approach KKR has developed in recent
years.  In executing this transaction, we leveraged the
resources of our worldwide franchise.  KKR is excited about
the software development and solutions business and the
expansive market it addresses."

    Ash Bhardwaj, CEO of the software business, said,
"This transaction is a positive development for our
customers, employees and stakeholders.  KKR is the world's
premier private equity investment firm, and its interest in
our business validates what we have accomplished and our
significant potential.  As a standalone business, we will
be better positioned to further develop our service and
product offerings, and expand our customer relationships. 
We look forward to collaborating with KKR and to our
continued relationship with our colleagues at
Flextronics."

    KKR will finance the acquisition with fully
underwritten debt facilities.  Citigroup Global Markets
(Asia) and Merrill Lynch are acting as Joint Bookrunners
and Joint Lead Arrangers for the acquisition financing.

    Completion of the transaction, which is expected in the
summer of 2006, is subject to regulatory approvals and
customary closing conditions. 

    Citigroup Global Markets and Morgan Stanley acted as
the exclusive financial advisors to KKR on the transaction
and Simpson Thacher & Bartlett LLP served as legal
counsel.  

    About KKR:

    KKR is one of the world's oldest and most experienced
private equity firms specializing in management buyouts,
with offices in New York, Menlo Park, California, London,
Paris, Hong Kong and Tokyo.  Over the past year, KKR has
committed more than $1 billion to technology businesses,
including SunGard Data Systems and Avago Technologies,
which are considered the two largest private equity
technology investments in history, with transaction prices
of $11.8 billion and $2.8 billion, respectively.  Past KKR
technology industry investments include: Amphenol, RELTEC,
Wincor Nixdorf, Tenovis and Zhone Technologies.  Over the
past thirty years, KKR has invested in more than 140
transactions with a total value of US$193 billion.  For
more information, please visit http://www.kkr.com .

    About Flextronics' Software Development and Solutions
Business:

    Flextronics' software development and solutions
business is the leading provider of high impact, innovative
software solutions to the global communications industry. 
Customers for its full spectrum offering of software
services, software products, and strategic design
consulting are the world's leading communications
companies. The software business has the unprecedented
ability to deliver complete software solutions that stretch
from network infrastructure to end user devices. In addition
to its operations in India and the United States, the
business has locations in China, Germany, Italy, South
Africa and Ukraine.

    For more information, please contact:

    In the US: 
     Mark Semer or Molly Morse
     Kekst and Company
     Tel:   [phone] or [phone]

    In Asia: 
     Richard Barton
     Gavin Anderson & Company
     Tel:   [phone] or [phone]

    In Europe: 
     Simon Moyse or Zoe Watt
     Finsbury
     Tel:   [phone] or [phone]

    For Flextronics' Software Development and Solutions
Business:

    In the Americas and Europe: 
     Jashojit "Jojo" Roy
     Tel:   [phone]
 
    In Asia: 
     Gauri Arora
     Tel:   [phone] x2865

SOURCE  KKR