An article by Marilyn Much at Investor's Business Daily zeroes in on how Amphenol (NYSE: APH) has helped consolidate the fragmented interconnect industry, which has over 2,000 players worldwide. The article notes that "as a big fish in a market filled with small fry, Amphenol has built up a hearty appetite for buyouts." The $2.8 billion maker of electronic and fiber-optic connectors has acquired approximately 19 smaller outfits since the end of 2002, notes the article.
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Smart acquisitions have contributed to the company's strong growth, say watchers from the investment community. From 2006 to 2010, earnings have climbed at a 16% average annual rate and sales by 13%. The latest acquisition came in July, when Amphenol purchased Borisch Manufacturing for an undisclosed amount. Borisch is an electronics contract manufacturer for the military and aerospace industries with sales in the last 12 months of roughly $100 million.
Longbow Research analyst Shawn Harrison says Amphenol is the No. 2 player in the connector market behind Tyco Electronics, with 90% of its business is tied to the connector market. Harrison figures Amphenol has grown 1.5 to 2x faster than the connector industry overall. Two-thirds of that growth has been organic, he says, and the rest is related to acquisitions.
"They've been able to expand the touch point of the acquired companies by typically taking smaller manufacturers and introducing them to its large client and distribution network or improving their cost competitiveness," said Harrison.
SOURCE: Acquisitions Help Maker Of Electronic Connectors Expand Its Reach (Investors.com)
