TE Connectivity's Acquisition of Richards Manufacturing: A Strategic Move in the Energy Sector

TE Connectivity Acquires Richards Manufacturing

In a significant move aimed at expanding its role in the energy sector, TE Connectivity plc, a global leader in connectors and sensors, has announced its plans to acquire Richards Manufacturing Co. The deal was finalized on February 12, 2025, and is reportedly valued at approximately $2.3 billion. This strategic acquisition will not only enhance TE's capabilities in serving electrical utilities in North America but will also leverage the strengths of Richards Manufacturing to capitalize on the robust growth trends associated with underground electrical networks.

Richards Manufacturing, based in Irvington, New Jersey, is widely recognized for its excellence in producing utility grid products. Over the past few years, the company has enjoyed impressive double-digit revenue growth and has established itself as a leader in underground distribution equipment, particularly in the realm of medium voltage cold-shrink cable accessories and network protector products. With a strong management team that will remain in place post-acquisition, TE Connectivity is set to benefit from this wealth of expertise.

CEO of TE Connectivity, Terrence Curtin, emphasized the importance of this acquisition, stating, "One of the key pillars of our strategy is investing in long-term secular growth trends that further our commitments to being a trusted partner to customers around the world and create value for our owners." This acquisition aligns perfectly with TE's ongoing investments in their Energy business. The approach has been to provide innovative products required for the evolution of the energy grid, particularly focusing on utility-scale renewables and grid reliability.

The merger is expected to occur amid a rising demand for grid replacements and upgrades driven by aging infrastructure. Joe Bier, CEO of Richards Manufacturing, expressed gratitude for Oaktree Capital Management's support during a transformative phase for the company. With nearly 80 years serving the utilities market, Richards Manufacturing has built a legacy of supporting the design, protection, and longevity of critical infrastructure. He reiterated the importance of merging with TE Connectivity, stating, "We believe TE is a great home for the business our family has built and are excited for a bright future ahead for Richards in TE."

Additionally, the financial aspects of the acquisition outline a robust outlook for TE Connectivity. The cash transaction is projected to bring in annual sales of approximately $400 million to TE’s Industrial Solutions segment, alongside EBITDA margins in the mid-30 percent range. This acquisition is anticipated to enhance TE's sales growth and adjusted operating margins significantly. Furthermore, TE expects around $0.10 accretion to its adjusted EPS in the first full year following the acquisition.

Despite the positive outlook, the completion of the acquisition is subject to various regulatory approvals and customary closing conditions, with an expected closure by June 2025. With Goldman Sachs acting as TE's financial advisor and Davis Polk & Wardwell LLP providing legal counsel, the transaction is poised to facilitate a seamless transition.

TE Connectivity, known for its vast portfolio of connectivity and sensor solutions, is dedicated to ensuring that every connection counts across a spectrum of industries, such as transportation, energy networks, automated factories, and medical technology. As it embarks on this new chapter with Richards Manufacturing, TE Connectivity aims to create a safer, productive, and connected future while advancing the power and communication infrastructure essential for modern society.

In summary, the acquisition of Richards Manufacturing marks a pivotal moment for TE Connectivity. As it integrates this premier manufacturing powerhouse into its operations, TE is not only looking to enhance its product offerings but also to establish a stronger foothold in the rapidly evolving energy market, which is crucial to supporting the increasing demands of the contemporary electrical grid.