Foxconn Electronics (Hon Hai Precision Industry), the world’s largest contract maker of electronics, has agreed to acquire a PC manufacturing plant from Dell in Poland. The new fab will strengthen Foxconn’s production capabilities in the region, whereas Dell will be able to concentrate on selling personal computers, not making them.

PCE Paragon Solutions, part of the Foxconn Technology Group, has signed a share purchase agreement with Dell Global B.V. and Dell International Holdings VIII B.V. to acquire Dell’s PC manufacturing plant in Lotz, Poland.

Due to lowering market share, slowly growing sales and uncertain economic condition, Dell may be refocusing from making PCs in some regions to just selling computers there and getting rid of manufacturing capacities. Sales of PC in Eastern Europe collapsed by up to 50% in 2009, according to some estimates, hence, it makes sense for Dell to sell the plant off in order to cut down losses resulting from low utilization. Meanwhile, Foxconn can make PCs for different brands at the plant.

The transaction expected to be closed by second half of 2010. Closing of the agreement will be dependent upon completion of customary business conditions and obtaining of requisite regulatory approvals.

Due to non-disclosure agreement with customers, terms and conditions of the agreement will be kept confidential, a statement by Foxconn reads. Some believe that the transaction cost reached $300 million.

Tags: Foxconn, Hon Hai, Dell, Business