GALWAY, Ireland, Feb. 12,
2025 /PRNewswire/ -- TE Connectivity plc (NYSE:
TEL), a world leader in connectors and sensors, has entered into a
definitive agreement to acquire Richards Manufacturing Co. from
funds managed by Oaktree Capital Management, L.P. and members of
the Bier family, long-standing owners and leaders of the business.
The transaction will strengthen TE's position in serving electrical
utilities in North America by
combining complementary product portfolios and adding the expertise
of the Richards team, enabling TE to benefit from strong growth
trends in underground electrical networks.
Richards is widely recognized as a best-in-class provider of
utility grid products and, over the last several years, has
experienced double-digit revenue growth. The company, headquartered
in Irvington, N.J., is a leader in
underground distribution equipment, with differentiated positions
in both medium voltage cold-shrink cable accessories and network
protector products. The Richards management team is committed to TE
and will continue to lead the business post-closing.
"One of the key pillars of our strategy is investing in
long-term secular growth trends that further our commitments to
being a trusted partner to customers around the world and creating
value for our owners," said TE Connectivity CEO Terrence Curtin. "We have been strategically
investing in our Energy business over the past several years to be
a growth driver for TE. We've benefited from our focus on utility
scale renewables and grid reliability by providing our customers
with innovative products required for the ongoing evolution of the
energy grid.
"The acquisition of Richards Manufacturing aligns with our
strategy and positions us to further capitalize on an accelerating
grid replacement and upgrade cycle in North America, driven by aging infrastructure,
the increased hardening of the network and the upgrades that are
required to support the increase in energy demand. We look forward
to building on the momentum of Richards' growth trajectory and
welcoming their talented team to TE."
Joe Bier, CEO of Richards
Manufacturing, said, "We are thankful for the partnership,
strategic support and resources that Oaktree brought to our firm.
Together, we have made significant investments in our facility,
products, and team to serve our customers. We are thrilled for the
next stage of our business as part of TE Connectivity. We have been
working in the utilities market for nearly 80 years supporting the
design, protection and life of critical infrastructure. We believe
TE is a great home for the business our family has built and are
excited for a bright future ahead for Richards in TE."
Ulysses Fowler, Managing Director
of Oaktree's Power Opportunities Group said, "Oaktree is proud to
have supported Richards through a transformative phase of
development. We thank Joe, the Bier family, the entire management
team, and all of Richards' employees for their dedication to
developing and delivering an innovative and high-quality product
portfolio while maintaining a total commitment to quality,
responsiveness, and customer service. All of us at Oaktree wish the
team at Richards continued success as part of TE."
Financial Highlights:
The all-cash transaction is valued at approximately $2.3 billion, subject to customary post-closing
adjustments. The transaction will be financed through cash and
additional debt.
TE expects mid-teens return on invested capital upon completion
of tax, revenue and cost synergies. Upon completion of the
transaction, the acquired business will be reported as part of TE's
Industrial Solutions segment and is expected to contribute annual
sales of approximately $400 million
and EBITDA margins in the mid-30 percent range. This acquisition is
expected to be accretive to TE's sales growth and adjusted
operating margins. TE expects approximately $0.10 accretion to its adjusted EPS in the first
full year, including financing costs and excluding acquisition and
amortization related expenses.
The transaction is subject to the receipt of certain regulatory
approvals and other customary closing conditions, and is expected
to close in TE's fiscal third quarter, ending June 2025.
Goldman Sachs & Co. LLC is serving as TE's financial advisor
and Davis Polk & Wardwell LLP is
acting as TE's legal counsel. Lincoln International is serving as
financial advisor, and Kirkland & Ellis LLP as legal counsel,
to Richards and Oaktree.
About TE Connectivity
TE Connectivity plc (NYSE: TEL)
is a global industrial technology leader creating a safer,
sustainable, productive, and connected future. Our broad range of
connectivity and sensor solutions enable the distribution of power,
signal and data to advance next-generation transportation, energy
networks, automated factories, data centers, medical technology and
more. With more than 85,000 employees, including 9,000 engineers,
working alongside customers in approximately 130 countries, TE
ensures that EVERY CONNECTION COUNTS. Learn more at www.te.com and
on LinkedIn, Facebook, WeChat, Instagram and X (formerly
Twitter).
About Richards Manufacturing
Richards Manufacturing
Co. is a premier manufacturer of overhead and underground
electrical and gas distribution products. Headquartered in
Irvington, New Jersey, the company
serves blue-chip utilities and electrical distributors in
the United States and
internationally. Richards is recognized as an industry leader with
an innovative portfolio of stock and customized products, a
consistent track record of dependable service, and longstanding
customer relationships. Learn more at www.richards-mfg.com.
About Oaktree
Oaktree is a leader among global
investment managers specializing in alternative investments, with
$202 billion in assets under
management as of December 31, 2024.
The firm emphasizes an opportunistic, value-oriented, and
risk-controlled approach to investments in credit, equity, and real
estate. The firm has more than 1,200 employees and offices in 23
cities worldwide. For additional information, please visit
Oaktree's website at http://www.oaktreecapital.com/.
Non-GAAP Financial Measures
Adjusted Operating Margin,
Adjusted EPS and Adjusted Return on Invested Capital are non-GAAP
measures. We present non-GAAP measures as we believe it is
appropriate for investors to consider adjusted financial measures
in addition to results in accordance with accounting principles
generally accepted in the U.S. ("GAAP"). These non-GAAP financial
measures provide supplemental information and should not be
considered replacements for results in accordance with GAAP.
Management uses non-GAAP financial measures internally for planning
and forecasting purposes and in its decision-making processes
related to the operations of our company. We believe these measures
provide meaningful information to us and investors because they
enhance the understanding of our operating performance and the
trends of our business. Additionally, we believe that investors
benefit from having access to the same financial measures that
management uses in evaluating our operations. The primary
limitation of these measures is that they exclude the financial
impact of items that would otherwise either increase or decrease
our reported results. This limitation is best addressed by using
these non-GAAP financial measures in combination with the most
directly comparable GAAP financial measures in order to better
understand the amounts, character, and impact of any increase or
decrease in reported amounts. These non-GAAP financial measures may
not be comparable to similarly-titled measures reported by other
companies.
Adjusted Operating Margin – represents operating margin (the
most comparable GAAP financial measure) before special items
including restructuring and other charges, acquisition-related
charges, impairment of goodwill, and other income or charges, if
any.
Adjusted Earnings Per Share - represents diluted earnings (loss)
per share from continuing operations (the most comparable GAAP
financial measure) before special items including restructuring and
other charges, acquisition-related charges, impairment of goodwill,
other income or charges, and certain significant tax items, if any,
and, if applicable, the related tax effects. With regard to the
forward-looking financial measure of our forecasted Adjusted EPS,
reconciliation to the applicable forward-looking forecasted GAAP
financial measure is not provided because it is not available
without unreasonable effort.
Adjusted Return on Invested Capital (ROIC) – represents adjusted
net operating profit after tax divided by average invested
capital. We use Adjusted Return on Invested Capital as an
indicator of our capital efficiency. Adjusted Return on
Invested Capital is not a measure defined by GAAP. It is calculated
by us, in part, using non-GAAP financial measures. We are providing
our calculation of Adjusted Return on Invested Capital as this
measure may not be defined and calculated by other companies in the
same manner.
Forward-Looking Statements
This release contains
certain "forward-looking statements" within the meaning of the U.S.
Private Securities Litigation Reform Act of 1995. These statements
are based on management's current expectations and are subject to
risks, uncertainty and changes in circumstances, which may cause
actual results, performance, financial condition or achievements to
differ materially from anticipated results, performance, financial
condition or achievements. All statements contained herein that are
not clearly historical in nature are forward-looking and the words
"anticipate," "believe," "expect," "estimate," "plan," and similar
expressions are generally intended to identify forward-looking
statements. We have no intention and are under no obligation to
update or alter (and expressly disclaim any such intention or
obligation to do so) our forward-looking statements whether as a
result of new information, future events or otherwise, except to
the extent required by law. The forward-looking statements in this
release include statements addressing our future financial
condition and operating results; our ability to fund and consummate
the transaction, including the receipt of regulatory approvals; and
our ability to realize projected financial impacts of and to
integrate the acquisition. Examples of factors that could cause
actual results to differ materially from those described in the
forward-looking statements include, among others, the extent,
severity and duration of business interruptions negatively
affecting our business operations; business, economic, competitive
and regulatory risks, such as conditions affecting demand for
products in the automotive and other industries we serve;
competition and pricing pressure; fluctuations in foreign currency
exchange rates and commodity prices; natural disasters and
political, economic and military instability in countries in which
we operate, including continuing military conflict in certain parts
of the world; developments in the credit markets; future goodwill
impairment; compliance with current and future environmental and
other laws and regulations; the possible effects on us of changes
in tax laws, tax treaties and other legislation; the risk that the
transaction may not be consummated; the risk that a regulatory
approval that may be required for the transaction is not obtained
or is obtained subject to conditions that are not anticipated; the
risk that Richards Manufacturing Co.'s operations will not be
successfully integrated into ours; and the risk that revenue
opportunities, cost savings and other anticipated synergies from
the transaction may not be fully realized or may take longer to
realize than expected. More detailed information about these
and other factors is set forth in TE Connectivity plc's Annual
Report on Form 10-K for the fiscal year ended Sept 27, 2024, as well as in our Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K and other reports
filed by us with the U.S. Securities and Exchange Commission.
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SOURCE TE Connectivity plc
