(Reuters) - Privately owned Koch Industries will buy Molex Inc, a maker of electronic connectors for companies including Apple Inc, for about $7.2 billion to give the billionaire Koch brothers a way to diversify from their traditional holdings in energy, chemicals and paper.
LISLE, Ill.-(BUSINESS WIRE)-Molex, LLC, a global manufacturer of complete interconnect solutions, announced today the acquisition of certain assets of Triton Manufacturing Company, Inc. Molex Inc., a maker of electronic components for products such as Apple Inc.’s iPhone, agreed to a $7.2 billion acquisition by Koch Industries Inc., the holding company controlled by the.
Koch Industries, which owns brands such as Brawny paper towels, Dixie Cups and Lycra, is controlled by Charles and David Koch, two of the world’s richest men.
The deal, pitched at $38.50 per share, represents a 42 percent premium on average to the Friday closing prices of Molex’s two classes of publicly traded shares, the companies said on Monday.
The deal has the support of the founding Krehbiel family and key executives who control about a third of the company’s common stock and 94 percent of the 94,255 unlisted Class B common shares. The Class B stock, held by 13 individuals as of June 30, is critical for approval of any deal.
Frederick Krehbiel and John Krehbiel Jr. are joint chairmen of the Molex board and are former CEOs of the 75-year-old company, which is run out of Lisle, Illinois.
Holders of Molex’s 95.6 million common shares will get a premium of 31 percent to the stock’s Friday close, while holders of 82.5 million Class A shares will get a premium of 56 percent.
Molex will become a standalone unit of Koch Industries, which is the second-largest private company in the United States according to Forbes, with estimated annual sales of $115 billion.
Koch Industries Chief Executive Charles Koch said Molex would fit well with his company’s culture and core capabilities and would provide a significant new platform for growth.
Molex will continue to be run by its current management.
UBS analysts expressed surprise at both the healthy valuation of the deal and the buyer.
“The precise motivation of the acquisition is unclear to us at this juncture,” Amitabh Passi and James Hillier said in a note.
“We expect the take-out of (Molex) to be generally positive for larger peers, TE Connectivity Ltd and Amphenol Corp, given prospects for industry consolidation at reasonably healthy multiples and a more concentrated competitive landscape,” they said.
Amphenol shares were up 1.5 percent at $76.11, while shares of TE Connectivity were up 1.5 percent at $50.99 in late morning trade on the New York Stock Exchange.
William Blair & Co and BDT & Co are financial advisers to Molex, while Goldman, Sachs & Co provided a fairness opinion and other financial advice, the companies said.
Koch is represented by Latham & Watkins LLP.
Molex’s common stock rose to $38.55 in morning trading on the Nasdaq, its highest price since 2006, while the Class A stock rose to $38.32, its highest since 2000.
The Koch brothers, known for their conservative views, walked away from talks to buy the Tribune Co’s newspaper assets late last month, concluding that the papers were not economically viable.
Reporting by Bijoy Koyitty in Bangalore; Editing by Maju Samuel and Ted Kerr
LISLE, Ill.--(BUSINESS WIRE)--Molex, a leading global manufacturer of electronic solutions, announced today the acquisition of Interconnect Systems, Inc. (“ISI”) which specializes in the design and manufacture of high density silicon packaging with advanced interconnect technologies.
According to Tim Ruff, senior vice president, Molex, the acquisition enables Molex to offer a wider range of fully integrated solutions to customers worldwide. “We are excited about the unique capabilities and technologies the ISI team brings to Molex. ISI’s proven expertise in high-density chip packaging strengthens our platform for growth in existing markets and opens doors to new opportunities.”
Headquartered in Camarillo, California, ISI delivers advanced packaging and interconnect solutions to top-tier OEMs in a wide range of industries and technology markets, including aerospace & defense, industrial, data storage and networking, telecom, and high performance computing. ISI uses a multi-discipline customized approach to improve solution performance, reduce package size, and expedite time-to-market for customers.
“We are thrilled to join forces with Molex. By combining respective strengths and leveraging their global manufacturing footprint, we can more efficiently and effectively provide customers with advanced technology platforms and top-notch support services, while scaling up to higher volume production,” said Bill Miller, president, ISI.
About Molex:
Molex brings together innovation and technology to deliver electronic solutions to customers worldwide. With a presence in more than 40 countries, Molex offers a full suite of solutions and services for many markets, including data communications, consumer electronics, industrial, automotive, commercial vehicle and medical. For more information, please visit www.molex.com.
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