) is to be acquired by a private company, Koch Industries, Inc.
for an approximate value of $7.2 billion.
Koch Industries will pay $38.50 per share for Molex, which
represents a 42% premium to the closing share price of its
publicly-traded stock on Sep 6. After the announcement yesterday,
Molex shares jumped 31.66% to its highest level since 2006. The
deal will be completed by the end of the year, subject to
customary closing conditions, including receipt of shareholder
and regulatory approvals.
Kansas-based Koch Industries is a private multinational
corporation owned by Charles and David Koch. It is one of the
largest private companies in the United States with operations
spread in nearly 60 countries and annual sales of about $115
billion. It owns companies in varied sectors such as biofuels,
chemicals, refining, fertilizers and commodity-trading services.
Since 2003, the company has invested $50 billion in acquisitions
and other capital expenditures. The brands owned by the company
include Brawny paper towels, Dixie Cups and Lycra.
The transaction has already been funded by certain
shareholders and executives owning about 32% of the common stock
and 94% of the Class B common stock. William Blair & Company
and BDT & Company will be acting as lead financial advisors
for the deal and
Goldman, Sachs & Co.
) will provide a fairness opinion and other financial advice.
Post acquisition, Molex will operate as an independent
subsidiary of Koch Industries. Management of Koch Industries
stated that the acquisition will expand its already large
portfolio and provide a significant new platform for growth.
Molex is a leading player in the fast-growing connector
market, with several secular growth drivers. The company sells
interconnection systems to automakers, military customers and
mobile-phone companies, including
), which uses some Molex connectors for its iPhone 5.
The acquisition can be seen as an attempt by the Koch
Industries to expand into connector components and diversify its
business from their traditional holdings in energy, chemicals and
paper. However, we are unclear about the need to pay the huge
amount for the acquisition.
Molex shares carry a Zacks Rank #3 (Hold).Stocks that are
performing well at current levels include
Methode Electronics Inc.
), all carrying a Zacks Rank #1 (Strong Buy).
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