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Celestica, IBM expand PC manufacturing deals

The contract PC manufacturer says it will expand its relationship with the computing giant in agreements valued at $500 million.

Contract PC manufacturer Celestica today said it will expand its manufacturing relationship with IBM in agreements valued at $500 million.

The agreements call for the sale and transfer of operations and assets of IBM's plants in Rochester, Minn., and Vimercate and Santa Palomba, both in Italy, to Celestica, the companies said in a statement. The plants all provide printed circuit board assembly and test services.

The agreements also include the license of intellectual property rights and transfer of assets relating to both IBM's enterprise systems group and its microelectronics division manufacturing business. About 1,800 employees from those divisions will join Toronto-based Celestica.

Celestica said the acquisition of the three plants and operations will add approximately $1.5 billion in annualized revenues.

Under terms of the deals, Celestica said it will provide Armonk, N.Y.-based IBM with a range of electronics manufacturing services, including supply chain management services, early prototyping, new product introduction, printed circuit board assembly and systems testing.

As contract PC manufacturers, Celestica and its competitors, including Solectron, Flextronics, SCI Systems and Jabil Circuit, handle the PC manufacturing needs of most of the leading computer vendors, such as IBM, Compaq, Apple, Sun Microsystems and Hewlett-Packard.