TE Connectivity's $2.3B Richards Manufacturing Deal: A Strategic Move for Growth

In a strategic move to bolster its position in the expanding North American energy market, TE Connectivity (TEL) has announced a definitive agreement to acquire Richards Manufacturing Co. for approximately $2.3 billion in an all-cash transaction. The deal, expected to close in TE's fiscal third quarter ending June 2025, will strengthen TE's energy portfolio and capitalize on the growing demand for grid replacements and upgrades.

Richards Manufacturing, a leading provider of utility grid products, has experienced double-digit revenue growth in recent years. The company's expertise in underground distribution equipment, particularly medium voltage cold-shrink cable accessories and network protector products, complements TE Connectivity's existing portfolio. This acquisition will enable TE to better serve the electrical utilities market in North America, driven by aging infrastructure, network hardening initiatives, and increasing energy demand.



TE Connectivity anticipates achieving mid-teens return on invested capital upon completion of tax, revenue, and cost synergies. The acquired business is expected to contribute annual sales of approximately $400 million and maintain mid-30% EBITDA margins. This acquisition is projected to be accretive to TE's sales growth and adjusted operating margins, with approximately $0.10 accretion to its adjusted EPS in the first full year, including financing costs and excluding acquisition and amortization related expenses.

The retention of Richards' management team is particularly noteworthy, as it helps preserve customer relationships and technical expertise – critical factors in the specialized utility products market. The expected closing timeline in TE's fiscal third quarter suggests manageable regulatory approval risks, though integration execution will be key to achieving projected returns.

In conclusion, TE Connectivity's acquisition of Richards Manufacturing Co. aligns with the company's long-term strategic goals and positions it to capitalize on the growing demand for grid replacements and upgrades in the North American energy market. The deal's expected synergies, strategic fit, and strong market position of Richards Manufacturing suggest that this transaction is a sound investment that will create value for TE Connectivity's shareholders.