Koch brothers move into electronics with $7.2bn Molex deal

PRIVATELY owned Koch Industries said yesterday it will buy Molex, a maker of electronic connectors for companies including Apple, for about $7.2bn 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 per cent premium on average to the Friday closing prices of Molex’s two classes of publicly traded shares, the companies said.

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 per cent of the 94,255 unlisted Class B common shares. The Class B stock, held by 13 individuals as of 30 June, 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 95.6m common shares will get a premium of 31 per cent to the stock’s Friday close, while holders of 82.5m Class A shares will get a premium of 56 per cent. 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 $115bn.

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.