In a statement, auto parts supplier Delphi Automotive has agreed to acquire HellermannTyton Group, a British manufacturer of electronic cable equipment. The acquisition deal is worth US$1.7 billion and is expected to augment Delphi’s existing business of supplying electronic components to the auto industry. The deal will be particularly helpful for Delphi to expand its business in Asia, where HellermannTyton Group boasts of a 15-20% growth rate. In 2014, more than half of HellermannTyton’s sales were to automotive sector. The deal would see shareholders of HellermannTyton receiving 480 pence a share in cash which represents a 44.5% premium to its closing price as recorded yesterday.
According to Kevin P. Clark, the President and Chief Executive of Delphi, growing demand for more connectivity in vehicles has made it necessary to add electrical architecture to vehicle content. After the announcement by Delphi, the value of shares of HellermannTyton Group rose by 41.9% during the early trading hours in London on Thursday. HellermannTyton was founded in 1933 and is based in Crawley, England. The company manufactures insulation products, wire ties, connectors, and cable protection systems. In 2014, HellermannTyton registered revenue worth US$659 million.
The deal is subjected to the approval of the shareholders and is expected to be closed by the end of the year. In a news release, David Newlands, the chairman of HellermannTyton Group mentioned that Delphi’s offer would benefit HellermannTyton’s shareholders with an increased value of shares. The board of directors at HellermannTyton Group intends to recommend shareholders to accept the offer. AXA Investment Managers, Artemis Investment Management, and JP Morgan Asset Management together hold 9.3% of HellermannTyton’s outstanding shares. These shareholders have agreed to vote in favour of the deal. JP Morgan Chase and Goldman Sachs are advising HellermannTyton Group regarding the deal whereas Barclays is helping Delphi on this matter.