Koch buys Molex for US$7.2 bn

US-based conglomerate Koch Industries is acquiring Molex Incorporated, a global electronic components company, for US$7.2 billion. Based on the closing stock prices on 6 September, the purchase price represents a 42% premium to the equity value of Molex’s publicly-traded stock, specifically a 31% premium to the Common Stock and a 56% premium to the Class A Common Stock.

The agreement has been approved by both the Molex and the Koch Industries boards of directors. Certain members of the Krehbiel Family and certain executive officers of Molex, owning in the aggregate voting stock representing approximately 32% of the Common Stock and 94% of the Class B Common Stock, have entered into voting agreements with Koch by which they have agreed to vote their stock in support of the transaction.

At the close of the transaction, Molex will become a standalone subsidiary of Koch and will continue to be operated by the company’s current management team. Molex, with a 75-year history of industry-leading product innovation, will retain the company name following the transaction as well as its headquarters in Lisle, Illinois.

“After 75 years this was a difficult decision, but our board of directors and our family believe that this transaction, which follows a diligent and thorough review process by the board, provides outstanding benefits for all our stakeholders. Importantly, our shareholders will receive a significant premium and compelling value for their holdings. The transaction is expected to provide substantial opportunities for our worldwide employees, many of whom have spent much of their working lives at Molex and are responsible for the company’s long term success,” said Fred Krehbiel, co-chairman of the Molex board.

Molex, which is involved in the moulding of connectors, sockets and cable assemblies, started off by producing flower pots and toys from Molex (a limestone-based mouldable thermoplastic). It entered into electronics in the 1940s and also developed a proprietary plated-plastic technology that provides shielding in applications such as mobile phone antennas.

Koch, run by billionaire brothers Charles and David, owns a variety of businesses, including the paper and paper products maker Georgia-Pacific; an oil refinery and chemicals company; a pipeline company; a cattle company; a fertiliser company; and commodity trading and services companies. It has annual sales of US$115 billion.

Earlier this year, a Koch subsidiary made a US$240 million investment in American Greetings Corp. to assist the company's transition to private ownership. Its refinery subsidiary bought two ethanol plants. Also this year, company acknowledged interest in buying media companies, though it dropped a pursuit of buying newspapers owned by the Tribune of Chicago. Last year Koch bought a 45% interest in Guardian Industries Corp., a maker of glass and automotive products.


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