PALO ALTO, Calif.—With public markets still not producing the strong responses to initial public offerings of the decade past, “going private” offers high-technology companies a respite from the pressure of quarterly results while pursuing business development and profitability.
Thus the decision at Flextronics International Ltd. to spin off its pure-play, wireless software solutions and service business to private equity firms Kohlberg, Kravis Roberts & Co. and Sequoia Capital, a deal announced earlier this year. Flextronics, the parent, is growing more slowly than the software division and the spin-off brought it an immediate $900 million in cash. Flextronics will keep a 15 percent stake in its more nimble offspring.
The new entity has re-emerged to establish its own identity, announced today as Aricent.
Aricent appears well-positioned as most of the wireless industry’s leading vendors are in its stable of clients.
The firm also has a significant pedigree. Hughes Software Systems, founded in 1991, became Flextronics Software Systems in 2004 when Flextronics International bought the firm. Also in 2004 Flextronics International purchased Frog Design, which has had significant design wins. The new company, Aricent, maintains Frog Design as an in-house division.
Aricent will offer wireless software for both the network core and the handset.
