Littelfuse Inc., a $2.1 billion maker of circuit protection products, electronic switches and automotive sensors, announced that it will acquire switch maker C&K Switches for $540 million. Littelfuse has signed a definitive agreement with C&K owner Sun Capital Partners Inc., a private equity firm.
The transaction is subject to customary closing conditions and regulatory approvals and is expected to close in the second calendar quarter of 2022. Littelfuse expects to fund the transaction consideration with a combination of cash and debt.
The acquisition of C&K is part of Littelfuse’s long-term growth roadmap to grow its business through organic growth and strategic acquisitions. Over the past decade, the company has acquired more than a dozen companies, adding sensors, switches, power controls and circuit protection to its portfolio. Last year, the company acquired Carling Technologies, which also specializes in switches and circuit protection.
Founded in 1928, C&K Switches is a designer and manufacturer of electromechanical switches and interconnect solutions with a global presence in a wide range of end markets including industrial, transportation, aerospace and data communications. C&K Switches has annualized sales of over $200 million and offers more than 55,000 standard products, 8.5 million switch combinations and custom-designed solutions.
Supplier consolidation has always been a mixed bag for the electronics supply chain. Following a merger, suppliers can expand their list of channels to include any distributor that offers one of the ranges. They can also consolidate their list with distributors who offer both ranges, or with a few global volume distributors and a handful of catalog, specialty, regional and local resellers. Analog Devices reduced its global channel following the acquisition of Linear Technologies and Maxim Integrated.
Component manufacturers can also discontinue product lines following a merger. In early March, Kyocera AVX acquired the tantalum and polymer capacitor business assets of Rohm Semiconductor. “Rohm will continue to produce tantalum and polymer capacitors and supply them to Kyocera until all relevant production lines have been successfully transferred to the Kyocera AVX manufacturing site,” the merger release said. “This will ensure continued supply for Rohm customers and immediately expand the already extensive selection of electrolytic capacitor solutions available to Kyocera AVX customers.”
Mergers and acquisitions are listed by risk management firm Resilinc as the second-largest supply chain risk in 2021. The first is factory fires.
Littelfuse and C&K are widely distributed through industrial and electronic channels. In the high-volume business, C&K sells through Avnet Inc.; Littelfuse supplies Arrow Electronics Inc. The two companies distribute through IP&E specialist TTI Inc., the Future Electronics Inc. global range and the Allied Electronics brand of Electrocomponents. In the past, competing component manufacturers refused to be sold side-by-side within distribution companies and would drop distributors if lines were bundled together. Such “shelf sharing” practices are now rare.
“We are delighted to welcome the employees of C&K Switches to the Littelfuse team,” said Deepak Nayar, senior vice president and general manager of Littelfuse Electronics Business. “With its strong brand reputation, long history of design excellence and high performing products, the addition of C&K Switches will strengthen our presence and growth in our target markets. Our complementary go-to-market models – through a combination of direct sales and distribution channels – and our expanded product portfolio will serve as a platform for future growth.
Littelfuse will share additional details about the C&K switches during the company’s first quarter fiscal 2022 earnings conference call. Littelfuse serves more than 100,000 customers in 15 countries across industrial, transportation and electronics end markets.
“C&K and Littelfuse share a common vision, with both companies having nearly 100 years of experience designing and manufacturing high performance products,” said Lars Brickenkamp, CEO of C&K. “With many common customers, applications and target markets, our two companies share a high level of business and cultural affinity, which will allow C&K to continue to serve our existing customers and quickly add new ones, with solutions competitive and market leaders.”
C&K switches will be reported in the electronics segment of Littelfuse.