TE Connectivity ( TEL ) plc shares are trading lower on Wednesday after the company agreed to acquire Richards Manufacturing Co. from Oaktree Capital Management and the Bier family in an all-cash transaction of around $2.3 billion.

The deal enhances TE’s position in North America’s electrical utility market by integrating complementary products and leveraging Richards’ expertise to capitalize on growth in underground electrical networks.

The company expects the acquisition to generate mid-teens returns on invested capital, driven by tax, revenue, and cost synergies.

The transaction is expected to close in TE Connectivity’s fiscal third-quarter ending June 2025.

The company plans to integrate business into its Industrial Solutions segment, contributing approximately $400 million in annual sales with EBITDA margins in the mid-30% range.

The deal is expected to boost TE’s sales growth and operating margins, with an anticipated 10 cents accretion to adjusted EPS in the first full year, excluding acquisition-related expenses.

TE Connectivity ( TEL ) CEO Terrence Curtin said, “The acquisition of Richards Manufacturing aligns with our strategy and positions us to further capitalize on an accelerating grid replacement and upgrade cycle in North America, driven by aging infrastructure, the increased hardening of the network and the upgrades that are required to support the increase in energy demand.”

The company plans to finance the transaction through cash and additional debt. As of December 27, TE’s cash and cash equivalents stood at $1.254 billion.

Last month, TE Connectivity ( TEL ) reported first-quarter 2025 adjusted EPS of $1.95, surpassing the $1.89 estimate, while sales of $3.84 billion fell short of the $3.91 billion estimate.

Investors can gain exposure to the stock via Investment Managers Series Trust III FPA Global Equity ETF and Vesper US Large Cap Short-Term Reversal Strategy ETF .

Price Action: TE shares are down 2.07% at $145.78 at the last check Wednesday.

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