Volex plc, a global leader in power and data connectivity solutions, has made two proposals to acquire TT Electronics. The first proposal included 62.9 pence in cash and 0.203 new Volex shares per TT Electronics share, valuing each share at 129.0 pence.
The second proposal offered 62.9 pence in cash and 0.223 new Volex shares per TT Electronics share, valuing each share at 135.5 pence. Both proposals were rejected by the Board of TT Electronics.
As of November 14, Volex’s latest proposal now values each TT Electronics share at 139.6 pence, offering a 76.7% premium to the closing price of 79.0 pence and a 73.2% premium to the one-month average price. This proposal values TT Electronics at £248.6 million.
Volex believes the offer provides an attractive opportunity for TT Electronics shareholders to realize cash while gaining from the growth of a larger business. If the offer is made, Volex plans to provide a mix-and-match facility for flexibility.
Lord Rothschild, Volex’s Executive Chairman, stated that merging with TT Electronics would create a leader in the specialist electronics market, benefiting from both cost and revenue synergies. Despite the resilience of TT Electronics, Rothschild cited persistent challenges and operational missteps as reasons for the offer.
TT Electronics’ shares are trading at a 10-year low, with the company’s acquisition strategy leading to inconsistent results. Recent updates have shown earnings downgrades and operational issues. In contrast, Volex has shown margin expansion and higher profitability.
Volex’s proposal offers TT Electronics shareholders a compelling alternative to the current situation, with immediate cash benefits and the potential for future growth. Volex aims to create a scaled leader in the electronics market, exposed to growth markets like medical and industrial technology, and to achieve significant cost efficiencies.
The Volex Board believes the combination will deliver value through diversification, scale, and synergies, improving profitability and creating a stronger business.
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