The Pulse
Flex Secures $2B Axiom Investment Ahead of 2027 Spin-Off
Flex agreed to sell $2 billion in convertible preferred shares of Axiom Solutions International to investors led by General Catalyst and Koch Equity Development. The deal values Axiom at an initial $37.5 billion enterprise value and support
AI.info Team · Written with AI ·
Flex has agreed to bring $2 billion into Axiom Solutions International at an initial enterprise value of $37.5 billion, funding the planned separation of its cloud and power infrastructure business as an independent company. The October 5 announcement names General Catalyst, Koch Equity Development and other investors as buyers of Axiom’s Series A convertible preferred shares. Flex expects the spin-off to take place in the first quarter of 2027, subject to approvals and other conditions.
A $2 billion preferred investment, not a completed spin-off
The investors have agreed to buy 200,000 preferred shares for $10,000 apiece, according to Flex’s SEC filing. The agreement was signed on October 2; the investment has not yet closed. Flex says closing depends on customary conditions, including regulatory approvals.
The preferred shares carry a 10% annual cash dividend before the separation. After the spin-off, the rate steps down to 6% if paid in cash or 7% if paid in kind, with increases possible after the fifth anniversary of the separation and certain other adjustments. General Catalyst will have the right to nominate one director to Axiom’s board after the separation.
EPC Power is a stated use for the proceeds
Flex CEO Revathi Advaithi said the investment will help fund the pending acquisition of EPC Power and strengthen Axiom’s balance sheet as it prepares to operate independently. “This investment provides equity funding for our recently announced acquisition of EPC Power and will allow Axiom to have a strong balance sheet as we prepare to stand up as an independent, publicly traded company squarely focused on the power, thermal, and compute infrastructure the AI era demands,” she said.
Flex says the investment’s net proceeds may fund part of EPC Power’s purchase price, repay bridge or other interim financing tied to the acquisition, pay dividends on the preferred shares, or serve general corporate purposes. Flex has separately secured committed term-loan financing for the rest of the EPC Power purchase price. The acquisition is expected to close in the fourth quarter of 2026; if it does, EPC Power is expected to join Axiom before the spin-off.
Flex guarantees a redemption if the separation misses its deadline
The investment agreement ties the preferred shares to the planned separation. If the spin-off has not been completed by December 31, 2027, Axiom must redeem the outstanding preferred shares, and Flex guarantees Axiom’s performance of that obligation. The contractual redemption price is 115% of the original purchase price if paid in cash or 125% if paid in Flex ordinary shares, with adjustments for cash dividends already paid and a tax-related gross-up.
Any redemption amount still unpaid on the applicable date accrues interest at 12% annually, the filing says. The terms set a defined financial consequence if the separation does not happen by the deadline; they do not remove the need for regulatory approvals or guarantee that the transaction will close.
Axiom’s independence still depends on approvals
Flex first announced its plan to separate the cloud and power infrastructure business in May and later named the planned company Axiom Solutions International. The SEC filing describes Axiom as a wholly owned Flex subsidiary for now. The spin-off remains subject to customary conditions, including shareholder and regulatory approvals, and Flex warns that the investment, EPC Power acquisition and separation may not be completed on the expected timetable.
The $2 billion commitment gives Axiom a sizeable preferred-capital financing agreement ahead of the planned listing, while also creating dividend and redemption obligations. The immediate milestones are whether the investment clears its closing conditions, whether EPC Power closes in the fourth quarter, and whether Flex completes the separation by its first-quarter 2027 target.