The Koch brothers will pay roughly $7.2 billion to buy Molex Incorporated (NASDAQ:MOLX), which manufactures electronic components, as the privately-owned Koch conglomerate seeks to expand beyond its established businesses in energy, chemicals and paper.
Wichita, Kan.-based Koch industries -- the second-largest private company in the U.S. owned by billionaire brothers, Charles and David Koch -- has offered $38.5 a share to acquire Lisle, Ill.-based Molex, which supplies electronic connectors for companies including Apple Inc. (NASDAQ:AAPL).
“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,” Fred Krehbiel, co-chairman of the Molex board, said in a statement.
The purchase price represents a 42 percent premium over Molex's closing stock price on Friday, the companies said in a joint statement. Investors who hold the 95.6 million common shares in Molex will receive a 31 percent premium while 82.5 million Class A stocks will draw a premium of 56 percent.
Molex shares rallied on Monday following the announcement and gained 31.66 percent to close at $38.63 on Nasdaq.
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Analysts, who were quoted by Reuters, expressed surprise about the healthy valuation of the company and the buyer. “The precise motivation of the acquisition is unclear to us at this juncture,” Amitabh Passi and James Hillier, analysts at UBS, were quoted as saying.
“We expect the take-out of (Molex) to be generally positive for larger peers, TE Connectivity Ltd and Amphenol Corp, given prospects for industry consolidation at reasonably healthy multiples and a more concentrated competitive landscape,” they said.
Molex will retain its brand name and will be operated by the company’s present management team as a standalone subsidiary of Koch industries. The transaction is expected to close by the end of the year and is subject to shareholder and regulatory approval.