April 10, 2012 / 2:00 PM / 5 years ago

TE Connectivity to sell two businesses for $403 million

3 Min Read

(Reuters) - Electronic connector maker TE Connectivity Ltd (TEL.N) said it will sell its non-core touch screen and TE professional services businesses for $403.5 million.

The company, formerly known as Tyco Electronics, will sell the touch screen business to private equity firm Gores Group for $380 million and the professional services unit to KGP Logistics for $23.5 million.

TE Connectivity cut its second-quarter outlook as it expects to record a $20 million loss from the two transactions.

"They (the deals) do not move the needle much in terms of changing the longer-term story," Macquarie analyst Mike Wood told Reuters.

The businesses being sold had a combined revenue of $534 million in fiscal 2011. TE Connectivity had $14.34 billion revenue in 2011.

Both the units were low-margin businesses for the company, Wood said, adding that the company told him it expects the deal to reduce full-year earnings by 11 cents a share.

The touch business is a supplier of touch screens and computers under the Elo TouchSystems brand, while the professional services division provides engineering and installation services to communication service providers.

TE Connectivity will classify the two businesses as discontinued operations from the second quarter, results of which are expected on April 25.

It expects second-quarter adjusted earnings of 62-66 cents a share, down from its earlier forecast of 64-68 cents a share.

TE Connectivity expects revenue of $3.15-$3.25 billion for the quarter, below its earlier outlook of $3.3-$3.4 billion.

Analysts expected profit of 66 cents a share and revenue of $3.36 billion, according to Thomson Reuters I/B/E/S.

Last week, the company — which was spun off from Tyco International TYC.N in 2007 — completed the $2.03 billion acquisition of Deutsch Group SAS which would boost its presence in the defense and industrial transportation sectors.

TE Connectivity shares, which have risen 10 percent so far this year, were trading up slightly at $34.88 on Tuesday on the New York Stock Exchange.

Reporting by A. Ananthalakshmi in Bangalore; Editing by Saumyadeb Chakrabarty and Joyjeet Das

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