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CAPITAL GOODS: TE Connectivity (TEL NR/NR/A-): Acquisition

CAPITAL GOODS
USBulletCredit BulletsNorth America

TE has been A- rated since 2014; on the face of it this looks like an easily manageable acquisition without disturbing ratings. Leverage is at multi year lows.

  • TE Connectivity has announced the acquisition of Richards Manufacturing from Oaktree for $2.3bn in cash. The target produces utility grid products.
  • The deal should add around 0.6x turns of leverage pre synergies. Current adj. net leverage is 1.1x. It’s expected to generate annual FCF more than $500mn exceeding shareholder returns. It also has the option to adjust buybacks.
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TE has been A- rated since 2014; on the face of it this looks like an easily manageable acquisition without disturbing ratings. Leverage is at multi year lows.

  • TE Connectivity has announced the acquisition of Richards Manufacturing from Oaktree for $2.3bn in cash. The target produces utility grid products.
  • The deal should add around 0.6x turns of leverage pre synergies. Current adj. net leverage is 1.1x. It’s expected to generate annual FCF more than $500mn exceeding shareholder returns. It also has the option to adjust buybacks.