TE Connectivity (TEL.N) announced it will acquire utility grid products manufacturer Richards Manufacturing Co for approximately $2.3 billion in cash, aiming to bolster its position in the electrical utilities sector amid surging power demand.
The acquisition comes as the power needs of data centers are expected to double within five years due to the rapid development and adoption of artificial intelligence. Demand is projected to rise from 176 TWh in 2023 to between 325 and 580 TWh by 2028.
President Donald Trump recently supported a $500 billion investment pledge by tech companies and investors to build infrastructure for AI facilities, highlighting the sector’s growing energy demands. Additionally, aging grid infrastructure, increased extreme weather events, and a shift toward greener energy sources are driving the need for grid upgrades and more resilient systems.
TE Connectivity CEO Terrence Curtin said, “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.”
Following the news, TE Connectivity’s shares rose about 4% in pre-market trading.
The Galway, Ireland-based company will acquire Richards Manufacturing from funds managed by Oaktree Capital Management, L.P., and the Bier family, long-time owners of the business. The deal is expected to close in June, financed through a combination of cash and new debt.
Once completed, Richards Manufacturing will become part of TE’s Industrial Solutions segment, contributing an estimated $400 million to annual sales. The acquisition is expected to enhance TE’s sales growth and adjusted operating margins, with projected accretion of about 10 cents to adjusted EPS in the first full year.
Goldman Sachs & Co. LLC is serving as TE Connectivity’s financial advisor, with Davis Polk & Wardwell LLP providing legal counsel.
