Shares of TE Connectivity Ltd. (TEL) gained 0.11% after the company announced the acquisition of U.S.-based Senor Technology firm – American Sensor Technologies. The financial details of the contract were however kept under wraps.
The American Sensor Technologies takeover is a strategic move by TE Connectivity to enhance its sensors and sensors system portfolio for application in harsh and extreme environmental conditions. This will also allow the company to capitalize on the significant opportunities in the sensor industry. The decision to acquire sensor technology companies comes at an opportune moment as according to a report by Markets and Markets, the global automotive sensor market is estimated to reach a value of $35.78 billion revenues in 2022 at a CAGR of 8.6% in the 2014–2022 period. Meanwhile, a report by Research and Markets suggests that the global pressure sensors market is worth $6.53 billion at present, projected to grow at a CAGR of 6.2% from 2014 to 2020.
In Jun 2014, TE Connectivity signed an agreement to acquire global designer and manufacturer of sensor and sensor-based systems, Measurement Specialties Inc. (MEAS) for $1.7 billion. Also, in Apr 2014, TE Connectivity announced its decision to acquire SEACON for $490 million, adding a wide range of products for undersea applications. Notably, the buyout was completed in Jul 2014.
Mount Olive, NJ-based American Sensor Technologies is a leading manufacturer of pressure sensors, transducers and related instrumentation to monitor pressure, differential pressure and liquid level. The company is a market leader in various industries and focuses on manufacturing products for use in harsh and extreme environments which involve high corrosion, high and low temperature, and toxic and hazardous material settings. The company generated annual revenues of $20 million in fiscal 2013.
Meanwhile, TE Connectivity leads the connectivity market and boasts a comprehensive portfolio. The company operates through four segments which together command a $100 billion market share. Moreover, TE Connectivity’s business is expected to grow at an annual rate of 5% over the next 5 years.
Post acquisition, American Sensor Technologies will be integrated into TE Connectivity’s Sensor Solutions business unit which is part of the Transportation Solutions segment.
TE Connectivity has a Zacks Rank #3 (Hold). Some better-ranked companies in the sector include AVX Corp. (AVX), TDK Corp. (TTDKY) and Universal Display Corp. (OLED). While AVX and TDK sport a Zacks Rank #1 (Strong Buy), Universal Display carries a Zacks Rank #2 (Buy).
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