Key Points
- TE Connectivity is acquiring Richards Manufacturing for $2.3 billion in cash to expand in the electrical utilities sector.
- AI-driven demand is expected to double data center power consumption by 2028, increasing the need for grid infrastructure upgrades.
- Richards Manufacturing will be integrated into TE’s Industrial Solutions segment, adding $400 million in annual sales.
- TE expects the deal to be accretive, boosting adjusted EPS by 10 cents in the first full year after the acquisition.
TE Connectivity (NYSE:TEL) has announced a definitive agreement to acquire utility grid products manufacturer Richards Manufacturing Co. for approximately $2.3 billion in cash. The move aims to strengthen TE’s position in the electrical utilities sector as demand for power surges, particularly due to the rapid expansion of artificial intelligence (AI) infrastructure.
With AI adoption accelerating, data center energy consumption is expected to rise significantly over the next five years. According to projections, power demand from data centers will grow from 176 terawatt-hours (TWh) in 2023 to between 325 and 580 TWh by 2028. Companies are investing heavily in grid infrastructure upgrades to meet this rising demand.
Factors such as aging infrastructure, the transition to renewable energy, and extreme weather conditions have also increased the urgency for more resilient and modernized power grids. TE Connectivity’s acquisition aligns with this industry shift, positioning the company to capitalize on an upcoming wave of grid replacement and enhancement projects.
TE Connectivity CEO Terrence Curtin emphasized that the deal reinforces the company’s long-term strategy. “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,” he said.
Ireland-based TE Connectivity will finance the acquisition through cash reserves and additional debt. The deal, expected to close in June 2025, will bring Richards Manufacturing under TE’s Industrial Solutions segment, contributing an estimated $400 million in annual sales.
TE Connectivity expects the transaction to enhance its revenue growth and operating margins. In the first full year after the acquisition, the company anticipates an increase of approximately 10 cents per share in adjusted earnings per share (EPS). Following the announcement, TE Connectivity’s shares climbed approximately 4% in pre-market trading, reflecting positive investor sentiment toward the acquisition.
Financial advisor Goldman Sachs & Co. LLC facilitates the acquisition, while Davis Polk & Wardwell LLP is TE’s legal counsel. Richards Manufacturing is being acquired from Oaktree Capital Management and members of the Bier family, which has long owned the company.
