The global terminal connector industry has developed rapidly in recent years, and the industry concentration is gradually increasing. Internationally represented by three multinational giants, TE, Amphenol and Molex, not only have their market share increased year by year, but also mergers and acquisitions in the same industry and across industries are more rapid. More than ten listed companies in the terminal connector industry represented by Luxshare Precision are the leaders in China, and they are also accelerating the pace of mergers and acquisitions. It is imperative to quickly integrate resources in China's terminal connector industry.
Since 1985, Bishop & Associates has counted 589 mergers and acquisitions in the terminal connector industry. From 1985 to 1999, there were 126 acquisitions. The pace of mergers and acquisitions has accelerated significantly. Since 2000, a total of 463 have been carried out. We use October 1, 2018 as the limit for statistics. However, in the first two weeks of October, several acquisitions have already taken place, and by the end of the year, many more are likely to happen.
Three of the world's largest terminal connector companies have been very aggressive in acquiring competitors. From 1999 to 2017, Amphenol acquired 49 companies and three in 2018. During the same period, Molex acquired 27 and TE acquired 25.
Of particular note is that while acquiring 52 companies, Amphenol also achieved an "industry-best" financial performance. The company's net income and return on equity have remained in double digits, the highest in the industry.
The table below shows the impact of the acquisition on the terminal connector industry.
The performance of the three major terminal connector companies from 1999 to 2017
In 1999, TE, Amphenol, and Molex had a total of 29.4% of the terminal connector market share. By 2017, the market share held by the three largest companies rose to 35.3%.
From 1999 to 2017, the compound annual growth rate (CAGR) of the Big Three reached 4.8%. The average CAGR of the terminal connector industry is 3.3%.
Amphenol's aggressive acquisitions (49 deals between 1999 and 2017) resulted in an '18 CAGR of 12.6%. Their market share also increased from 2.5% in 1997 to 11.0% in 2017.
There is no doubt that acquisitions have had a major impact on the terminal connector industry. For example, many important terminal connector companies have been merged into larger entities. These include Augat, FCI, Robinson Nugent, Cardell and M/A-Com, among others, which no longer exist. Other companies such as Teradyne, Litton Industries, Thomas & Betts, TRW and Labina still exist, but they have sold their terminal connector business.