Flex (NASDAQ: FLEX) announced its board has approved a plan to spin off its power and cloud portfolio into an independent publicly traded company, targeted to close in the first quarter of 2027.

The spin-off will create two separate entities. The new company, referred to as SpinCo, will focus on power and thermal management technologies for AI data centers and mission-critical applications. Flex will continue as a manufacturing company serving healthcare, industrial, automotive, communications and lifestyle markets.

Revathi Advaithi, current CEO of Flex, will become CEO of SpinCo and serve as chairman of Flex's board during a transitional period. Michael Hartung will be named CEO of Flex following the separation.

Flex projects SpinCo to generate approximately 65% to 75% revenue growth in fiscal 2027, with acceleration to more than 80% in fiscal 2028. The remaining Flex business is expected to achieve low-to-mid-single-digit growth with continued margin expansion and cash generation.

SpinCo will operate 22 engineering and manufacturing centers globally, providing power distribution, thermal management and integrated infrastructure systems. The company will target growth in AI data centers and utilities markets as power densities and thermal complexity increase.

The transaction is intended to be tax-free to shareholders. Citi, PJT Partners and BofA Securities are serving as financial advisors to Flex for the spin-off.

Following the separation, Flex will operate through two segments: Integrated Technology Solutions and Regulated Manufacturing Solutions, maintaining more than 75 manufacturing and logistics sites across 30 countries.