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Koch snags electronics connector maker Molex in $7.2B acquisition

By: Frank Esposito

September 13, 2013

Industrial conglomerate Koch Industries Inc. has acquired Molex Inc. — a major producer of plastic components for the electronics market — in a deal valued at around $7.2 billion.

The $38.50-per-share deal represented an overall premium of 42 percent on public Molex stock as of Sept. 6, officials with both companies said in a Sept. 9 news release. The stock was trading at $38.50 early Sept. 13.

The deal is being supported by the boards of both companies, as well as members of the Krehbiel family, which founded Molex in 1938 and controls almost one-third of the firm's common stock.

"After 75 years, this was a difficult decision," Molex board co-Chairman Fred Krehbiel said in the release. "But our board of directors and our family believe that this transaction … provides outstanding benefits for all our stakeholders."

Koch Chairman and CEO Charles Koch added in the release that Molex is "an exciting acquisition that matches up well with our culture and core capacities."

Lisle, Ill.-based Molex posted sales of just over $3.6 billion in its fiscal 2013, which ended June 30. That total was up almost 4 percent vs. the year before. The company's fiscal 2013 profit of just under $244 million was down almost 14 percent in the same comparison.

Molex operates 41 manufacturing sites and employs more than 35,000 worldwide. More than 70 percent of the firm's sales are generated from products sold outside of the U.S.

The company's per-share stock price began 2013 around $27.50 and was under $30 when the deal with Koch was announced.

Products made by Molex include connectors, sockets and cable assemblies, many of which are plastic-based. The firm was launched when Frederick August Krehbiel and his son Edwin developed a durable, moldable thermoplastic from limestone and industrial by-products. They dubbed the material Molex and used it to make items such as flowerpots and toys before the firm ventured into electronics in the 1940s.

Today, Molex uses plastic resin as a primary raw material and operates state-of-the-art injection molding equipment, according to company documents. The firm's proprietary plated plastic technology provides shielding in applications such as mobile-phone antennas.

Wichita, Kan.-based Koch is one of the largest private companies in the U.S., with annual sales of about $115 billion. In plastics, Koch owns Invista, a Wichita-based firm that ranks as one of the world's largest makers of nylon resin and fibers. Koch's other investments include refining, chemicals and ranching.