Flex to Acquire EPC Power for $4.4B in AI Infrastructure Play

Flex Bets on Power Infrastructure for AI Era

Flex Ltd. announced September 3 it will acquire EPC Power, a power conversion systems manufacturer, in a $4.4 billion transaction that positions the contract manufacturer to serve the electricity infrastructure needs of artificial intelligence data centers.

The deal, expected to close in the fourth quarter of 2026, will fold EPC Power into Flex's Cloud and Power Infrastructure segment. Flex plans to finance the acquisition through a combination of debt and equity, with committed financing from Citi and Bank of America.

Why it matters

The acquisition reflects how AI's massive power requirements are reshaping infrastructure markets. By securing power conversion technology now, Flex is positioning itself for both near-term revenue growth and a strategic spin-off that could unlock shareholder value. The deal's success will hinge on whether Flex can integrate the technology quickly enough to justify the premium price tag while simultaneously preparing the business unit for independence.

Technology and Market Positioning

EPC Power brings power conversion and grid-forming technology to Flex's portfolio, including 800-volt power conversion systems currently in production and development work on solid-state transformers. CEO Revathi Advaithi described the move as capitalizing on "a generational shift in power architecture" driven by rising power density and changing digital infrastructure demands.

Beyond AI data centers, EPC Power serves utility-scale energy storage systems and microgrids, diversifying Flex's exposure across multiple infrastructure growth markets.

Financial Projections and Spin-Off Plans

EPC Power is projected to generate approximately $800 million in revenue during 2026, with organic revenue growth of roughly 40 percent expected in 2027. The company's EBITDA margin is forecast to expand by double-digit percentage points to around 30 percent next year.

The acquisition takes on added significance because Flex intends to spin off its Cloud and Power Infrastructure business as a standalone public company in the first quarter of 2027. EPC Power's technologies will become part of that independent entity's portfolio.

Integration Risks

The $4.4 billion valuation creates substantial pressure on Flex's balance sheet. The company must successfully integrate EPC Power's technology and operations while simultaneously preparing the broader CPI segment for independence as a public company. Any integration delays or operational challenges could complicate the planned spin-off timeline.

The transaction's ultimate success will depend on whether the acquired business generates sufficient earnings and cash flows to justify the premium Flex is paying, particularly as the company navigates the dual challenges of integration and separation.

These details were first reported by AI Watch.