TE Connectivity Eyes Inorganic Growth on AdvancedCath Buy - Analyst Blog
Leading connectivity and sensor solutions provider TE Connectivity Ltd . ( TEL ) has penned a definitive agreement to acquire AdvancedCath for $190 million cash. The deal marks a tactical move for TE Connectivity to position itself as a leading player in the medical device market. The acquisition, subject to regulatory approval and conditions, is expected to close in late Mar 2015.
AdvancedCath, with revenue estimates of $60 million in 2015, is a proven leader in supplying advanced catheter systems. Combining state-of-art technology with profound industry knowledge, the firm is a perfect pick for TE Connectivity.
In addition, TE Connectivity's rapidly growing medical business is engaged in designing and manufacturing of connectors, sensors, surgical instruments, and other diagnostic products. The latest venture, aimed at integrating TE Connectivity's engineering and manufacturing strengths with AdvancedCath's innovative technology, comes as a judicious decision on the part of the former and will likely drive growth in the healthcare market.
Over the past few years, Original Equipment Manufacturer ("OEM") has experienced rapid innovation in procedures that have significantly improved the quality of outcome. As a result, the industry has become highly competitive with companies striving to provide the best-quality services to customers.
TE Connectivity, leveraging AdvancedCath's competency, will now be able to provide an unparalleled range of sensor, electrical and biomedical technologies. Further, the company can utilize AdvancedCath's highly experienced manufacturing unit to produce progressive medical devices, thereby, fostering innovation and driving future growth.
This acquisition will not only enable TE Connectivity to strengthen its existing market position, but also open up new avenues of growth. For instance, the deal is also expected to expand TE Connectivity's opportunities in interventional device outsourcing and manufacturing business. Considering the market's impressive annual growth of 10%, TE Connectivity's future prospects seem bright.
TE Connectivity currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include AU Optronics Corp. ( AUO ), Rogers Corp. ( ROG ) and Intricon Corp. ( IIN ). All these stocks sport a Zacks Rank #1 (Strong Buy).