8-KMaterial AgreementsRegulation FDExhibits & Filings

TE Connectivity plc 8-K Report, Material Agreement (Sep 17, 2018)

Filed September 17, 2018For Securities:TEL

Summary

TE Connectivity plc (TEL) announced on September 17, 2018, the execution of a definitive agreement to sell its Subsea Communications business unit to Crown Subsea AcquisitionCo LLC for $325 million in cash. This divestiture is a significant strategic move, allowing the company to streamline its operations and focus on core areas. The transaction is subject to customary closing conditions, including regulatory approvals, and is expected to be completed by December 31, 2018. The sale includes potential for contingent consideration, offering TE Connectivity a share in future upside if the buyer resells the business within 24 months of closing. This sale represents a focused effort by TE Connectivity to optimize its portfolio. The proceeds from this transaction will likely strengthen the company's financial position and provide flexibility for future investments or capital allocation. Investors should monitor the closing process and the company's subsequent strategic initiatives as it continues to refine its business mix.

Key Highlights

  • 1TE Connectivity plc (TEL) to sell its Subsea Communications business unit for $325 million in cash.
  • 2The sale agreement was entered into on September 16, 2018, with Crown Subsea AcquisitionCo LLC.
  • 3The transaction is subject to customary closing conditions, including regulatory approvals.
  • 4A potential termination fee of $22,750,000 is payable by the purchaser under specific financing default scenarios.
  • 5TE Connectivity will receive contingent consideration of 20% of net proceeds if the buyer resells the business within 24 months of closing.
  • 6The company has entered into a Credit Support Agreement to provide transitional credit support for the divested business.
  • 7The sale is expected to close by December 31, 2018.

Frequently Asked Questions

TE Connectivity is selling its Subsea Communications business unit for an aggregate purchase price of $325 million in cash. The sale was executed through its affiliate, Tyco Electronics Group S.A., to Crown Subsea AcquisitionCo LLC.

Yes, the sale is subject to customary closing conditions, including the receipt of certain required regulatory approvals. The purchaser has financing commitments, but the seller's obligation to close is conditioned on the purchaser securing debt financing for the business's post-closing operations. The agreement also has a termination date of December 31, 2018, and potential termination fees for the purchaser.

The Credit Support Agreement is a transitional measure. TE Connectivity will provide credit support for the divested Subsea Communications business for up to three years after closing, initially capped at $300 million. This is intended to ensure stability for the business during and immediately after the ownership transition.

TE Connectivity may receive contingent consideration equal to 20% of the net proceeds if the buyer, Crown Subsea AcquisitionCo LLC, sells the Subsea Communications business within 24 months following the closing of the current transaction. This provides TE Connectivity with a potential upside if the business is quickly resold at a profit.