Hexatronic Group AB (Gothenburg, Sweden) today announced its signing of a binding asset purchase agreement to acquire all business activities of Rochester Cable, one of the main designers and manufacturers of harsh environment electro-optical cables in the U.S., from global connectors and sensors specialist TE Connectivity (TE) for an enterprise value of USD 55 million.
Rochester Cable is a recognized leader in the design and manufacture of electro-optical cables for operation in harsh environments. In its 40,000 square meter production site with 130 employees in Culpeper, Virginia, Rochester Cable manufactures armored electro-optical working cables that provide strength as they transmit power, control signals, and data. The company's cables are highly engineered to meet specific requirements in demanding industries such as oil and gas, sensing, defense, oceanographic, and subsea applications.
The acquisition agreement broadens Hexatronic’s offering within fiber-optic submarine communication cables to include dynamic working cables that can transmit electrical signals and power in addition to transmitting optical signals. The acquired electro-optical cables can accommodate extreme water depths to 6,000 meters and connect a variety of sensors, equipment, and remotely operated vehicles.
The acquired business includes the land and buildings of the production sites and office buildings. Product sales are mainly in the U.S., but also in the EMEA and APAC regions. TE noted it has significantly invested in Rochester Cable over the last decade, increasing plant capacity, and that the company's existing production facility provides many possibilities for further growth.
Purchase price and financing
According to a Hexatronic press release, in the broken fiscal year, October 2021 to September 2022, Rochester Cable is expected to generate a proforma stand-alone EBITDA of approximately USD 8 million, representing a proforma transaction multiple of approximately 7x EBITDA.
The acquisition is immediately accretive to earnings, adding an estimated 0.18 SEK per Hexatronic share in the first full year after close. The purchase price of USD 55 million is to be paid in cash at closing, fully financed with senior debt.
Second quarter pro forma Net Debt-to-EBITDA ratio for the Hexatronic Group, including Rochester Cable and previously announced transactions, is expected to be about 2.0.
Completion of the transaction is subject to regulatory approvals and is expected no later than March 31, 2023.
“We are happy to have reached an agreement with TE Connectivity to acquire the business activities of Rochester Cable. Rochester Cable is uniquely positioned with its know-how and application expertise, which has been developed as a market leader for decades. The highly skilled team has developed a truly differentiated offering and long-term partnerships with its customers. Hexatronic has been a supplier of fiber optic submarine communication cables since the 1990s. Combining the know-how, geographical footprint, and product portfolio of Rochester Cable in the U.S. and Hexatronic submarine business in Sweden provides exciting opportunities for the future.”-- Henrik Larsson Lyon, CEO of Hexatronic Group