Emerson Electric Co.
Bel Fuse Inc.
) and have signed an agreement whereby Bel Fuse has accepted to buy
Emerson's Connectivity Solutions (ECS) business in a roughly $98
million all-cash deal. Subject to regulatory approvals, the deal is
expected to close in the second quarter of 2014 and be immediately
accretive to Bel's earnings.
Connectivity Solutions is part of Emerson's Network Power
Business and primarily offers products to the wireless
communications, telephone and data network, CATV, defense, security
systems and health care industries apart from other industrial
customers. These products have a broad range of radio frequency,
microwave and fiber optic interconnect components and assemblies.
In fiscal 2013, Emerson's Connectivity Solutions generated revenues
of $83 million.
The acquisition of Emerson's Connectivity Solutions is a
strategic move by Bel Fuse as the business complements the existing
line of business of the latter. Through this acquisition, Bel Fuse
intends to expand into the aerospace and military markets, where
long-term product reliability through highly engineered solutions
is an important factor.
Further, the addition of Connectivity Solutions' Stratos brand
to the Fibreco/Gigacom Interconnect products of Bel Fuse would give
the latter an industry leading position in the Expanded Beam Fiber
Optic market. Also, the ECS group will considerably expand Bel
Fuse's copper-based product offering with its RF/Microwave
connectors and assemblies.
For Emerson, this divestiture is a viable option as connectivity
solutions are not aligned with its long-term goals and strategies.
Further, Emerson intends to use the deal proceeds for share
repurchases in fiscal 2014.
This is the third acquisition that Bel Fuse has pursued in the
last one year. In Apr 2014, the company signed an agreement with
) to acquire its Power Solutions business in an all cash deal worth
$117 million. In Apr 2013, Bel Fuse acquired Transpower Magnetics
TE Connectivity Ltd
) in an all cash deal worth approximately $22.4 million. Bel Fuse
expects these three acquisitions to increase its revenues by about
149% to $705 million from $283 million annually, from fiscal 2014
Bel Fuse primarily engages in the design, manufacture and sale
of products used in networking, telecommunications, high-speed data
transmission, commercial aerospace, military, transportation, and
consumer electronics. Emerson, on the other hand, is a global
leader in technology and engineering, and provides innovative
solutions for customers in industrial, commercial and consumer
markets around the world.
Emerson currently has a Zacks Rank #3 (Hold).
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