Koch Industries Inc announced Monday it intends to acquire leading electronic components giant Molex Incorporated (NASDAQ:MOLX) (NASDAQ:MOLXA) for $7.2 billion. The two companies signed an agreement on the acquisition after their boards approved the deal. Koch Industries will purchase all the outstanding shares of Molex Incorporated (NASDAQ:MOLX) (NASDAQ:MOLXA) for $38.50 a share in cash, the companies said in a joint statement. That values Molex Incorporated (NASDAQ:MOLX) (NASDAQ:MOLXA) at about $7.2 billion.

Koch Industries

Molex to provide Koch Industries new platform for growth

Koch Industries is paying a 31% premium to Molex Incorporated (NASDAQ:MOLX) (NASDAQ:MOLXA)’s Common Stock and 56% premium to its Class A shares based on the company’s closing price on September 6. Led by Charles Koch, Koch Industries is one of the world’s largest private conglomerates. After the agreement, Charles Koch said that Molex Incorporated (NASDAQ:MOLX) (NASDAQ:MOLXA) provides his company a new platform for growth. He said the electronic component maker is a promising purchase whose culture and core capabilities are the right fit for Koch Industries.

Molex Incorporated (NASDAQ:MOLX) (NASDAQ:MOLXA), a Lisle, Illinois-based 75 year old company, reported $3.6 billion in revenues for the fiscal year ending June 30, 2013. About 70% of the company’s sales come from outside the United States. The company has more than 35,000 employees and 41 manufacturing units around the world. Molex Incorporated (NASDAQ:MOLX) (NASDAQ:MOLXA) manufactures about 100,000 products for consumer electronics, mobile devices, industrial, telecom, military, automotive and aerospace industries.

Koch Industries says Molex to retain its team

Molex Incorporated (NASDAQ:MOLX) (NASDAQ:MOLXA) co-chairman Fred Krehbiel said in a statement that it was a tough decision after 75 years of operation. But the Krehbiel family and the company board reviewed the offer that provided exceptional benefits to the company shareholders. Krehbiel family and some senior executives, who jointly own 32% of Molex Incorporated (NASDAQ:MOLX) (NASDAQ:MOLXA)’s common stock and 94% of Class B shares, have already agreed to vote in favor of the deal.

Koch Industries expects to close the transaction by the end of this year. After the acquisition, Molex Incorporated (NASDAQ:MOLX) (NASDAQ:MOLXA) will become an independent subsidiary of Koch Industries. The electronic component maker will retain its current management team, and will continue to operate from Lisle, Illinois.

Latham & Watkins LLP  advised Koch Industries on the acquisition. Dentons was the legal adviser to Molex Incorporated (NASDAQ:MOLX) (NASDAQ:MOLXA) while William Blair & Company and BDT & Company acted as its financial advisers.