Cerberus to acquire TE SubCom for $325m

20 September 2018 | Natalie Bannerman

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TE SubCom, the subsea cable division of TE Connectivity, is to be acquired by an affiliate of Cerberus Capital Management (Cerberus) for $325 million in cash.  

The deal is expected to close by the end of TE SubCom’s 2019 fiscal year (December 2018), subject to the standard regulatory conditions and TE Connectivity intends on using the proceeds of the transaction to finance share repurchases.

“SubCom is a recognised pioneer in the subsea fibre optic cable industry with a long track record of technology innovation and excellent project management and customer service,” said Michael Sanford, co-head of North American Private Equity and senior managing director of Cerberus.

TE SubCom is one of the leading suppliers of submarine network systems and has completed more than 100 submarine cable systems deployments to date. In addition, it operates eight cable ships, roughly 1,400 employees and a customer base of leading internet content providers, telecommunications companies and entrepreneurs.

The company was forecast to contribute approximately $700 million in revenues to the fiscal year 2018 results – although this is reportedly a minimal contribution to TE Connectivity’s profit margins and may be one of the drivers behind its decision to sell.

“The industry-leading solutions and services that SubCom delivers will become even more critical for global companies as demand for data and connectivity continues to grow rapidly,” continued Sanford. “Through this investment, SubCom will become an independent, standalone business that is well-positioned to capitalise on the significant growth opportunities ahead.”

New York-based Cerberus is a private equity investor that specialises in ‘distressed investing’ with more than $35 billion under management. As well as telecoms, the company also invests in energy and natural resources, government service and manufacturing, industrial, automotive, to name a few.

“We look forward to partnering with the talented SubCom employees and leveraging our operational expertise and resources to deliver innovative, integrated, and reliable solutions to meet the needs of SubCom’s global customers,” added Sanford.