Du Pont Announces Sale of Electronics Subsidiary
WILMINGTON, Del. (AP) _ The Du Pont Co. announced Monday it is selling its electronic connector systems business to a private investment firm for about $400 million.
The sale to Hicks, Muse & Co., which has offices in New York and Dallas, is expected to be completed by the end of 1992. Also investing in the purchase is Mill & Partners Inc., a St. Louis-based company specializing in taking over companies and improving their operations.
The new company will be headquartered in Harrisburg, Pa., where the business is currently based.
Du Pont will receive $375 million cash and $25 million in preferred stock. Hicks will be saddled with $300 million debt from loans. Hicks will receive a $200 million loan from Chemical Bank and a $100 million temporary loan from an investment banking house, that will be refinanced with a bond issue.
Thomas O. Hicks, chairman of Hicks Muse, said a cash flow of $70 million will be more than enough to ″comfortably″ handle the annual interest debt payments of $25 million to $30 million.
Du Pont Connector Systems is an international manufacturer of electronic connectors and related cable assemblies used in the data processing and telecommunications industries. The subsidiary employs about 3,000 workers worldwide.
About 70 people from sales, marketing and customer service departments will be relocated from Delaware to Harrisburg, said Bob Rickenbach, a Du Pont spokesman.
Last May, Du Pont announced its intention to divest its connectors business because it was outside its core electronics portfolio.
″Our expertise is in materials - chemicals, polymers and films - how we put things together ... There was no synergy between connectors and other businesses″ in Du Pont, said Norris Tolson, vice president and general manager of Du Pont Connector Systems, who will be president and chief operating officer of the new company.
Du Pont purchased the subsidiary in 1972 when it was doing business as Berg Electronics Inc. Since then, the company’s sales have grown from $25 million to more than $400 million last year.
Once the purchase is completed, the subsidiary will resume doing business under the Berg name.