TE Connectivity To Sell Its SubCom Business
01 Oct 2018
TE Connectivity Ltd., a world leader in connectivity and sensors, has announced that it has entered into a definitive agreement to sell its subsea communications business (SubCom) to Cerberus Capital Management, L.P., a global leader in alternative investing, for $325 million in cash.
The transaction is expected to close by the end of the first quarter of TE's fiscal year 2019 and is subject to customary closing conditions. The company expects to use proceeds from the sale to fund share repurchases. TE's SubCom business, a part of the company's Communications Solutions segment, is a leading global supplier of undersea communications technology and marine services.
"The SubCom business is a leader in the undersea telecommunications market, and distinctly different from the rest of TE's connectivity and sensor portfolio. We are pleased that with this transaction we increase our focus as a leading industrial technology company. It strengthens our business model; resulting in a stronger growth profile, reduced cyclicality, higher margins and a greater return on investment," said TE Connectivity CEO Terrence Curtin. "We appreciate the contributions that the SubCom team has made to our company and toward building a more connected world, and we expect that they will continue that important work in the future with Cerberus."
The SubCom business was expected to contribute approximately $700 million in sales to fiscal year 2018 results, with a minimal contribution to profitability. TE will provide supplemental information with respect to the SubCom business, when it announces its financial results for the fourth quarter of fiscal year 2018.