Amphenol To Snap Up MTS Systems For $1.7B

Amphenol Corp. announced the acquisition of MTS Systems Corp. in a deal valued at $1.7 billion, including debt. As part of the transaction, the provider of high-tech interconnect, antenna and sensor solutions will pay $58.50 per share to MTS.

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Amphenol (APH) expects to finance the deal through cash on hand and a combination of borrowings under its existing credit and commercial paper facilities. The deal is expected to close in mid-2021.

The transaction is expected to be accretive to Amphenol’s EPS in the first year of closing, with a contribution of about $0.10 and $0.06 from MTS’s (MTSC) Sensors and Test & Simulation segments, respectively.

Amphenol’s CEO R. Adam Norwitt said, “This acquisition is consistent with our strategy of continuing to expand our range of sensor and sensor-based products across a wide array of industries to further capitalize on the long-term growth potential of the electronics revolution.” (See APH stock analysis on TipRanks)

On Dec. 7, Jefferies analyst David Kelley raised the stock’s price target to $157 (17.5% upside potential) from $138 and maintained a Buy rating. The analyst said, “APH’s share inflection reflects connector recovery, solid mix of sustained WFH [working from home] & ramping cyclical exposure, strong execution, & content expansion. Despite looming difficult ’21 WFH comps, we believe APH has more room to run & see upside to 4Q20/1Q21 ests. on the heels of continued cyclical sales upside & better profit conversion.” He added that “Acquisition step-up could also prove a further catalyst.”

Meanwhile, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 4 Buys and 4 Holds. The average price target stands at $128.14 and implies downside potential of about 4.1% to current levels. Shares have gained 23.5% year-to-date.