Koch brothers move into electronics with $7.2 billion Molex deal

Mon Sep 9, 2013 1:16pm EDT
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(Reuters) - Privately owned Koch Industries will buy Molex Inc, a maker of electronic connectors for companies including Apple Inc, for about $7.2 billion to give the billionaire Koch brothers a way to diversify from their traditional holdings in energy, chemicals and paper.

Koch Industries, which owns brands such as Brawny paper towels, Dixie Cups and Lycra, is controlled by Charles and David Koch, two of the world's richest men.

The deal, pitched at $38.50 per share, represents a 42 percent premium on average to the Friday closing prices of Molex's two classes of publicly traded shares, the companies said on Monday.

The deal has the support of the founding Krehbiel family and key executives who control about a third of the company's common stock and 94 percent of the 94,255 unlisted Class B common shares. The Class B stock, held by 13 individuals as of June 30, is critical for approval of any deal.

Frederick Krehbiel and John Krehbiel Jr. are joint chairmen of the Molex board and are former CEOs of the 75-year-old company, which is run out of Lisle, Illinois.

Holders of Molex's 95.6 million common shares will get a premium of 31 percent to the stock's Friday close, while holders of 82.5 million Class A shares will get a premium of 56 percent.

Molex will become a standalone unit of Koch Industries, which is the second-largest private company in the United States according to Forbes, with estimated annual sales of $115 billion.

Koch Industries Chief Executive Charles Koch said Molex would fit well with his company's culture and core capabilities and would provide a significant new platform for growth.

Molex will continue to be run by its current management.   Continued...