Amphenol Corporation Announces Pricing of Senior Notes Offering

Rhea-AI Summary

Amphenol (NYSE: APH) has announced the pricing of senior notes totaling $1.5 billion, with varying interest rates and maturity dates. The proceeds will be used for the acquisition of Carlisle Interconnect Technologies business, fees, expenses, and general corporate purposes. The offering is subject to special mandatory redemption conditions if the acquisition does not occur. BofA Securities, Citigroup Global Markets, J.P. Morgan Securities, and TD Securities are the joint book-running managers for the offering.

Insights

Debt Capital Markets Analyst

The announcement by Amphenol Corporation regarding the pricing of their senior notes offering is a strategic move for financing its acquisition of Carlisle Interconnect Technologies. The interest rates set for the 2027 and 2029 Notes at 5.050% and for the 2034 Notes at 5.250% reflect the current market conditions and the company's creditworthiness. These rates are slightly higher than what might be seen in a low-interest environment, indicating a market expectation of rising rates or a premium for the specific credit risk of Amphenol.

Investors should note the inclusion of a special mandatory redemption clause, which adds a layer of protection in case the acquisition does not proceed as planned. This clause could potentially affect the yield to maturity calculations for investors, as the notes might be redeemed earlier than their stated maturities at 101% of the principal amount.

Overall, the offering is a significant financial event for Amphenol, as it ties directly to their strategic expansion via the CIT Acquisition. The outcome of this offering will likely influence Amphenol's leverage ratios and interest coverage metrics, which are important indicators of financial health watched closely by investors and rating agencies.

M&A (Mergers & Acquisitions) Analyst

The use of proceeds from the notes offering to fund the CIT Acquisition suggests a leverage buyout component to the deal structure. The acquisition of Carlisle Interconnect Technologies is expected to enhance Amphenol's offerings in the aerospace and military sectors, potentially leading to synergies and increased market share. However, the actual realization of these benefits will depend on the successful integration of the businesses.

For stakeholders, the key concerns would revolve around the execution risk associated with the acquisition and the subsequent integration process. While the acquisition could provide growth and diversification benefits in the long term, there is always a risk of overpaying or failing to achieve the expected synergies, which could negatively impact Amphenol's profitability and stock performance.

Furthermore, the acquisition's timing and execution will be under scrutiny, as delays or complications could trigger the special mandatory redemption of the notes, impacting the company's financial strategy.

Corporate Finance Advisor

Amphenol's financing strategy, combining the issuance of senior notes with cash and other debt, demonstrates a balanced approach to capital structure management. It is important to note that the seniority of the notes implies that these debt holders would have a higher claim on assets in the event of a liquidation, which can be attractive to risk-averse investors.

From a corporate finance perspective, the decision to raise funds through the debt market rather than issuing equity helps avoid shareholder dilution. This can be seen as a positive signal to existing shareholders, as the company is opting to finance growth while preserving shareholder value.

However, the increase in debt levels will also result in higher interest expenses, which could impact net income and cash flows. The management's ability to service this debt through operational cash flows and the expected benefits from the CIT Acquisition will be critical for maintaining financial stability and investor confidence.

WALLINGFORD, Conn.--(BUSINESS WIRE)-- Amphenol Corporation (NYSE: APH) announced today the pricing of its offering of $450 million aggregate principal amount of senior notes due 2027 (the “2027 Notes”), $450 million aggregate principal amount of senior notes due 2029 (the “2029 Notes”) and $600 million aggregate principal amount of senior notes due 2034 (the “2034 Notes”, and together with the 2027 Notes and 2029 Notes, the “Notes”). The 2027 Notes will have an interest rate of 5.050% per annum, the 2029 Notes will have an interest rate of 5.050% per annum, and the 2034 Notes will have an interest rate of 5.250% per annum. The closing of the offering is expected to occur on April 5, 2024, subject to the satisfaction of customary closing conditions.

The Company intends to use the net proceeds from the offering, together with a combination of cash on hand and other debt financing, to pay the cash consideration for the Company’s pending acquisition of the Carlisle Interconnect Technologies business of Carlisle Companies Incorporated (the “CIT Acquisition”), the payment of fees and expenses related thereto and, to the extent that the net proceeds from this offering are not used for such purposes, for general corporate purposes.

Each series of the Notes are expected to be subject to a special mandatory redemption (at a price equal to 101% of the principal amount of such series of the Notes, plus accrued and unpaid interest from the date of initial issuance, or the most recent date to which interest has been paid or provided for, whichever is later, to, but not including, the special mandatory redemption date) under certain circumstances if the CIT Acquisition is not consummated or is not consummated by an agreed upon date.

BofA Securities, Inc., Citigroup Global Markets Inc., J.P. Morgan Securities LLC and TD Securities (USA) LLC are serving as the joint book-running managers for the offering of each series of the Notes.

Each series of the Notes are being offered pursuant to the Company’s effective shelf registration statement on file with the Securities and Exchange Commission (the “SEC”). A prospectus supplement describing the terms of this offering will be filed with the SEC. Copies of the prospectus supplement and accompanying prospectus for the offering may be obtained from BofA Securities, Inc. toll-free at 1-800-294-1322, Citigroup Global Markets Inc. toll-free at 1-800-831-9146, J.P. Morgan Securities LLC at 1-212-834-4533 and TD Securities (USA) LLC toll-free at 1-855-495-9846.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any series of the Notes, nor will there be any sale of any series of the Notes, in any jurisdiction in which such offer, solicitation or sale would be unlawful. Any offer, solicitation or sale of any series of the Notes will be made only by means of the prospectus supplement and the accompanying prospectus.

About Amphenol
Amphenol Corporation is one of the world’s largest designers, manufacturers and marketers of electrical, electronic and fiber optic connectors and interconnect systems, antennas, sensors and sensor-based products and coaxial and high-speed specialty cable. Amphenol designs, manufactures and assembles its products at facilities in approximately 40 countries around the world and sells its products through its own global sales force, independent representatives and a global network of electronics distributors. Amphenol has a diversified presence as a leader in high-growth areas of the interconnect market including: Automotive, Broadband Communications, Commercial Aerospace, Defense, Industrial, Information Technology and Data Communications, Mobile Devices and Mobile Networks. For more information, visit www.amphenol.com.

Forward-Looking Statements
Statements in this press release which are other than historical facts are intended to be “forward-looking statements” within the meaning of the Securities Exchange Act of 1934, as amended, the Private Securities Litigation Reform Act of 1995 and other related laws. While the Company believes such statements are reasonable, the actual results and effects could differ materially from those currently anticipated. Details regarding various significant risks and uncertainties that may affect our operating and financial performance can be found in the Company’s latest Annual Report on Form 10-K and the Company’s subsequent filings with the Securities and Exchange Commission, including Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. In providing forward-looking statements, the Company is not undertaking any duty or obligation to update these statements publicly as a result of new information, future events or otherwise, except as required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240402757851/en/

Sherri Scribner

Vice President, Strategy and Investor Relations

203-265-8820

IR@amphenol.com

Source: Amphenol Corporation

FAQ

What is the total amount of senior notes offered by Amphenol (NYSE: APH)?

Amphenol (NYSE: APH) offered a total of $1.5 billion in senior notes, comprising $450 million for 2027 Notes, $450 million for 2029 Notes, and $600 million for 2034 Notes.

What are the interest rates for the senior notes offered by Amphenol (NYSE: APH)?

The 2027 Notes and 2029 Notes offered by Amphenol (NYSE: APH) have an interest rate of 5.050% per annum, while the 2034 Notes have an interest rate of 5.250% per annum.

What is the intended use of the net proceeds from the offering by Amphenol (NYSE: APH)?

Amphenol (NYSE: APH) intends to use the net proceeds from the offering, along with cash on hand and other debt financing, for the acquisition of Carlisle Interconnect Technologies business, fees, expenses related to the acquisition, and general corporate purposes.

Who are the joint book-running managers for the offering of senior notes by Amphenol (NYSE: APH)?

The joint book-running managers for the offering of senior notes by Amphenol (NYSE: APH) are BofA Securities, Citigroup Global Markets, J.P. Morgan Securities, and TD Securities.

What is the expected closing date for the offering of senior notes by Amphenol (NYSE: APH)?

The closing of the offering of senior notes by Amphenol (NYSE: APH) is expected to occur on April 5, 2024, subject to customary closing conditions.