By Jack Keough
Koch Industries is acquiring Molex Inc., a global manufacturer of switches, cable assemblies, connectors and lighting products, for $7.2 billion, or $38.50 per share, making it one of the largest purchases in the electrical/electronics industries this year. Based on the closing stock prices on September 6, the purchase price represents a 42% premium to the equity value of Molex’s publicly-traded stock.
The agreement has been approved by both the Molex and the Koch Industries boards of directors.
At the close of the transaction, Molex will become a standalone subsidiary of Koch Industries and will continue to be operated by the company’s current management team. Molex, with a 75-year history of product innovation, will retain the company name following the transaction as well as its headquarters in Lisle, Illinois.
Molex has 41 plants in 15 countries. About 57% of its manufacturing capacity is in “lower-cost areas,” such as China, Poland and Mexico, according to the company, the Wall Street Journal reported.
Molex offers approximately 100,000 products through direct salespeople and authorized distributors. Markets that Molex serves include mobile devices, infotech, consumer electronics, automotive, telecommunications, industrial, medical, military and aerospace. Sales for the fiscal year ended June 30, 2013 were $3.6 billion. Over 70% of Molex’s revenues come from products sold outside the United States.
The transaction is expected to be completed by the end of the year.
The Molex acquisition is Koch’s largest since it paid $22 billion, including assumption of debt, for Georgia-Pacific Corp. in 2005.
Based in Wichita, Kan., Koch Industries, Inc. is one of the largest private companies in the country with annual revenues of about $115 billion. Koch owns a diverse group of companies across a wide range of industries.
Since 2003, Koch companies have invested about $50 billion in acquisitions and other capital expenditures. With a presence in nearly 60 countries, Koch companies employ about 60,000 people worldwide. In 2012, Koch companies employed nearly 50,000 people in the United States.
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Jack Keough was the editor of Industrial Distribution magazine for more than 26 years. He often speaks at many industry events and seminars. He can be reached at john.keough@comcast.net or keoughbiz@gmail.com
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