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Koch Industries buying electronics maker Molex for $7.2 billion

September 09, 2013|Bloomberg News

Molex Inc., a maker of electronic components for Apple Inc.'s iPhone and other products, agreed to a $7.2-billion acquisition by Koch Industries Inc., the holding company controlled by the billionaire Koch brothers.

Koch will buy Molex's shares for $38.50 apiece, a 31% premium over the publicly traded common stock, the companies said Monday.

Koch, a closely held company that owns things as varied as biofuel, fertilizer makers and commodity-trading services, is using the acquisition to expand into connector components. The deal won the support of the Krehbiel family, which has controlled Molex since it began as a manufacturer of moldable plastic in 1938.

"It's a bit of a surprise since it had been family-owned for such a long time," said Shawn Harrison, an analyst at Longbow Research in Independence, Ohio.

Molex shares jumped $9.29, or 31.7%, to $38.63 after the announcement.

The deal will turn Molex into a stand-alone division of Koch, with the company retaining its name and headquarters in Lisle, Ill. Molex sells interconnection systems to automakers, mobile-phone companies and military customers. That includes Apple, which uses some Molex connectors for the iPhone 5.

Investors are getting "a significant premium and compelling value for their holdings," Fred Krehbiel, the 72-year-old grandson of Molex co-founder Frederick August Krehbiel, said in a statement. His family holds sway over the company through a dual-class share structure.

For Koch, the transaction is its biggest deal in eight years and provides a "significant new platform for growth," the company said. The acquisition is the second-largest in Koch's history, after the 2005 purchase of Georgia-Pacific for $13.2 billion, excluding debt, according to data compiled by Bloomberg. The company said it has spent about $50 billion in acquisitions and capital spending since 2003.

Charles and David Koch, who control Koch Industries, have a net worth of almost $45 billion apiece, according to Bloomberg Billionaires data. They are the sixth- and seventh-richest people in the world and have added $4 billion each to their fortunes this year.

The Kochs drew protests this year over speculation that they might buy the Los Angeles Times or other Tribune Co. publications. In May, union groups rallied against a potential sale to Koch Industries, citing the brothers' support for initiatives such as California's Proposition 32, a failed ballot measure that would have prohibited unions from using payroll deductions for political purposes without permission.

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