TE Connectivity (NYSE: TEL) announced on February 12, 2025, its agreement to acquire Richards Manufacturing Co. for approximately $2.3 billion in cash. This strategic move aims to bolster TE's position in the North American electrical utilities market by integrating Richards' expertise in underground electrical networks.

Richards Manufacturing, headquartered in Irvington, New Jersey, specializes in medium-voltage cold-shrink cable accessories and network protector products. The company has experienced double-digit revenue growth in recent years, serving blue-chip utilities and electrical distributors both domestically and internationally.

"The acquisition of Richards Manufacturing aligns with our strategy and positions us to further capitalize on an accelerating grid replacement and upgrade cycle in North America," said TE Connectivity CEO Terrence Curtin. He highlighted that this cycle is driven by aging infrastructure, increased hardening of the network, and upgrades required to support the rise in energy demand.

The all-cash transaction is valued at approximately $2.3 billion and will be financed through a combination of cash reserves and additional debt. TE expects mid-teens return on invested capital upon completion of tax, revenue, and cost synergies. Upon completion, Richards will be integrated into TE's Industrial Solutions segment and is expected to contribute approximately $400 million in annual sales with EBITDA margins in the mid-30% range. The acquisition is projected to be accretive to TE's sales growth and adjusted operating margins, with an expected $0.10 accretion to adjusted EPS in the first full year, including financing costs and excluding acquisition and amortization-related expenses.

The transaction is subject to regulatory approvals and customary closing conditions, with an expected close in TE's fiscal third quarter, ending June 2025.

Joe Bier, CEO of Richards Manufacturing, expressed optimism about the acquisition, stating, "We believe TE is a great home for the business our family has built and are excited for a bright future ahead for Richards in TE."

This acquisition comes at a time when the U.S. power grid is undergoing significant modernization efforts due to aging infrastructure and increasing energy demands. The Federal Energy Regulatory Commission (FERC) approved a new rule in May 2024 to facilitate the transmission of renewable energy to the electric grid, aiming to modernize the aging power grid to accommodate increasing energy demands from data centers, electric vehicles, and buildings. Additionally, the Biden administration has been utilizing artificial intelligence to address the substantial backlog of renewable energy projects waiting to connect to the U.S. power grid.

The acquisition of Richards Manufacturing positions TE Connectivity to play a significant role in the ongoing efforts to modernize and expand the U.S. power grid, ensuring it meets the evolving demands of the energy sector.