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Now that Swiss electrical powerhouse ABB has agreed to acquire venerable connector maker Thomas & Betts for $3.9 billion, could both bigger and smaller U.S. connector makers be next?
Shares of Memphis, Tenn.-based Thomas & Betts, which closed Friday at $57.95, will surge Monday to meet the $72 a share ABB has agreed to pay. Indeed, they were at $71.20 in pre-market trading and were at $71.04 after the first hour of trading in Monday's slumping market.
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So how about both either TE Connectivity, formerly known as Tyco Electronics, which previously acquired AMP, the largest global connector maker for $11.3 billion in 1998, or Molex, the No. 2 connector maker, with a market capitalization of $4.68 billion?
While not as sexy as semiconductors, engineers at Thomas & Betts, Harrisburg, Pa.-based AMP and Lisle, Ill.-based Molex work closely with all the chipmakers on new products because all electronic products, from PCs to telephones, require connectors.
So do other industrial products, from automobiles to washing machines. The connectors - the devices that keep two parts of an electrical circuit in contact - are a vital component of 21st century electronics and industry. New products like Intel's new Ultrabook Core i5 chips will require the smallest-ever products from the connector industry.
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Shares of TE Connectivity closed Friday at $34.30, valuing the company, also based in Switzerland, at $14.6 billion. Molex shares closed Friday at $26.61, down a penny. Shares of both declined in early Monday trading.
"Because our products are complementary, we'll go to market with one of the broadest offerings in the industry," ABB's American CEO, Joe Hogan, said in announcing the Thomas & Betts acquisition.
Like Tyco Electronics and Molex, Thomas & Betts has factories worldwide, situated close to industrial companies that are its customers. That could also make those plants more attractive to international buyers in Asia, especially China, more attractive over time.
Thomas & Betts also reported fourth-quarter results Monday, whcih were good. Net income rose 30 percent to $1 a share as revenue increased 13 percent to $603 million.
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