Expanding Horizons: How Knowles' $263M Cornell Dubilier Acquisition Will Supercharge Its 2024 Earnings

Electronic components provider Knowles Corp KN has entered into a definitive agreement to acquire Cornell Dubilier (CD) in an all-cash transaction.

The total cost of the acquisition is $263 million, with a $140 million cash payment at closing and an interest-free seller note of $123 million.

South Carolina-based Cornell Dubilier is a manufacturer of high-quality film, electrolytic and mica capacitors used in demanding medtech, military, aerospace, and industrial electrification applications.

Cornell Dubilier has an annualized revenue of more than $135 million and over 35 thousand customers.

The acquisition is expected to expand Knowles' serviceable available market through Cornell Dubilier's capacitor offerings.

The combination of Cornell Dubilier's broad selection of power film, electrolytic and mica capacitors with Knowles' Precision Devices segment will deliver wider portfolio of products and solutions.

The deal is expected to be accretive to Knowles' non-GAAP EPS in 2024.

"Adding Cornell Dubilier's impressive, broad-based roster of OEM and distribution partner customers, as well as its leading capabilities in capacitor technology will expand the applications for Knowles' products...We admire the outstanding company and culture built by the Kaplan family over the past 40 years and we look forward to welcoming Cornell Dubilier's talented employees to Knowles," said CEO Jeffrey Niew.

The acquisition is expected to close in the fourth quarter of calendar year 2023.

Knowles expects to finance the acquisition with a combination of cash on hand, borrowings from its existing revolving credit facility, and the seller note. The company held $54.4 million in cash and equivalents as of June 30, 2023.

Knowles also said that it is reviewing strategic alternatives for its CMM business.

CMM designs and manufactures micro-electro-mechanical systems microphones that enable voice control communication and superior audio recording for customers across the ear, compute, internet of things and smartphone market segments.

The company expects the strategic actions to accelerate its transformation into an industrial technology company.

Price Action: KN shares are trading higher by 7.75% at $15.35 on the last check Monday.