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Koch Industries to Buy Molex for $38.50 a Share

Tickers in this article: MOLX

NEW YORK (TheStreet) -- Koch Industries, the industrial conglomerate run by libertarian billionaire Charles Koch, is buying electronic components maker Molex International for $38.50 a share, in an all-cash deal valued at about $7.2 billion.

The proposed acquisition will help to further diversify the assets of Koch Industries. The deal also comes at about a 42% premium to Molex's value on September 6, representing a 31% premium to the company's common stock and a 56% premium to its Class A shares.

The merger has been approved by both the Molex and the Koch Industries boards of directors, with certain members of Molex's founding Krehbiel family and other shareholders also voting in favor of the transaction. Overall, approving shareholders represent approximately 32% of the common stock and 94% of the Class B Stock, according to the joint statement announcing the deal.

Molex will become a standalone subsidiary of Koch Industries and will continue to be operated by the company's current management team, according to the companies' press release. Molex, which has over 35,000 employees, will also retain its headquarters in Lisle, Illinois.

"After 75 years this was a difficult decision, but our board of directors and our family believe that this transaction, which follows a diligent and thorough review process by the board, provides outstanding benefits for all our stakeholders," Fred Krehbiel, co-chairman of the Molex board, said in a statement.

"The transaction is expected to provide substantial opportunities for our worldwide employees, many of whom have spent much of their working lives at Molex and are responsible for the company's long term success."

Koch Industries CEO Charles Koch called Molex "an exciting acquisition that matches up well with our culture and our core capabilities. It also provides a significant new platform for growth."

Monday's deal is not subject to a financing condition, Koch Industries said. The firm's acquisition of Molex is expected to close by year-end. The company's largest ever acquisition is an over $21 billion deal for Georgia Pacific in 2005.

William Blair and BDT & Company, a boutique advisory firm led by Berkshire Hathaway's longtime banker Byron Trott, are serving as lead financial advisors to Molex. Goldman Sachs, Trott's former firm, provided a fairness opinion and other financial advice. Dentons is acting as Molex's legal advisor. Koch is represented by Latham & Watkins.

-- Written by Antoine Gara in New York.