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TE Connectivity Ltd., Schaffhausen, Switzerland, entered into a definitive agreement to sell its subsea communications business (SubCom) to Cerberus Capital Management, L.P., for $325 million in cash. The transaction is expected to close by the end of the first quarter of TE's fiscal year 2019 and is subject to customary closing conditions.
TE's SubCom business, based in Eatontown, NJ, is part of the company's Communications Solutions segment. It is a global supplier of undersea communications technology and marine services, primarily subsea fiber-optic networks. TE Connectivity said it expects to use proceeds from the sale to fund share repurchases.
"The SubCom business is a leader in the undersea telecommunications market, and distinctly different from the rest of TE's connectivity and sensor portfolio. We are pleased that with this transaction we increase our focus as a leading industrial technology company. It strengthens our business model; resulting in a stronger growth profile, reduced cyclicality, higher margins and a greater return on investment," said TE Connectivity CEO Terrence Curtin.
The SubCom business was expected to contribute approximately $700 million in sales to fiscal year 2018 results, with a minimal contribution to profitability.