Flex agrees to value Axiom at $37.5 billion, close to Flex's market value

Flex has agreed to sell $2 billion of preferred stock in Axiom, the data-center power business it plans to split off, to funds affiliated with General Catalyst, Koch Equity Development, and other investors. The deal puts an initial enterprise value of $37.5 billion on Axiom, close to the $43.9 billion value of Flex's shares.

Axiom's $37.5 billion counts the business's debt, while the $43.9 billion is only what the shares are worth, at $118.81 by 9:53 a.m. Eastern time. As of Friday, June 26, Flex had about $5.2 billion of borrowings and $2.8 billion of cash, roughly $2.4 billion of net debt. Adding that debt makes the whole company worth more than the shares alone, and Axiom's mark is still close to the value of all of Flex.

In the year ended Tuesday, March 31, 2026, Axiom had $6.6 billion of sales, about a quarter of Flex's $27.9 billion. The manufacturing businesses Flex plans to keep had $21.3 billion. Our read is that these prices leave little of Flex's market value for that manufacturing business, which produces most of the sales.

"This transaction reflects the value we see in Axiom's business today and will translate into lasting value for Flex shareholders as the separation comes together," said Revathi Advaithi, chief executive of Flex and the expected chief executive of Axiom.

The investors are not buying ordinary Axiom shares at $37.5 billion. They are buying preferred stock that pays 10% in cash until the split, $200 million a year on the full $2 billion, then 6% in cash or 7% if Axiom pays in extra shares, and the rates can rise five years after the split. The preferred is Axiom's to service, and Flex said the sale proceeds may be used to pay the dividend, so part of the coupon can come from the investors' own money.

The investment agreement sets the conversion price at the lower of a price that would value Axiom at $37.5 billion and 120% of a reference price. After a reset date, another reference price can pull it lower, and the agreement allows other adjustments. A lower price means more ordinary shares, so $37.5 billion works as a ceiling in that formula, not as cash paid for the common stock today.

If the split is not finished by Friday, December 31, 2027, Flex guarantees a buyout. The investors would be owed $2.3 billion in cash, 115% of what they paid, or $2.5 billion in Flex shares, 125%, and cash dividends already received come off both.

A year of the 10% coupon is $200 million. If the money arrives around the end of this year, the cash still owed at the deadline would be $2.1 billion and the share amount $2.3 billion, with that $200 million already received.

Counted together, the investors get 15% more than they paid if Flex pays cash, or 25% more in Flex shares. The coupon is part of that total, not extra. Unpaid amounts would earn interest at 12% a year, and Flex would cover certain taxes on the payout.

The $37.5 billion is 5.7 times Axiom's sales and 61 times its $610 million of segment income, Flex's measure of the unit's profit, at a 9.2% margin. In May, Flex targeted 65% to 75% revenue growth for the business in fiscal 2027, the year ending March 2027. That target is the company's case for the price.

Part of the $2 billion is meant to help pay for EPC Power, which Flex agreed to buy on Thursday, September 3 for $4.4 billion before the usual closing adjustments. Flex expects the split in the first quarter of 2027 and has said it is intended to be free of U.S. tax for shareholders. The split requires a shareholder vote, approval from Singapore's High Court, and U.S. clearance for Axiom to list, and the preferred sale needs U.S. competition approval before any cash arrives.

Flex shares were up 1.9% from Friday's close alongside Monday's announcement, after a 3.4% rise on Friday, before the announcement. Over three months they are down 8.8%, and they sit 28% below a 52-week high of $166.86, even after nearly doubling since the end of 2025. At today's price, the shares value all of Flex near the private mark on a business with about a quarter of the sales.