Nu

mb

er

of

Tra

nsa

ctio

ns

M&A Activity: Interconnect Components

65

102

5663

67

13 17

0

20

40

60

80

100

120

2014 2015 2016 2017 2018 YTD 2018 YTD 2019

3April 2019www.capstoneheadwaters.com

Capstone Headwaters

In the age of industrial automation, robotics, and big data analytics,

communication between machines and the associated transmission of data

have become an integral component of the manufacturing process and have

driven demand for advanced interconnect components. As new technologies

develop and further shape the manufacturing landscape, interconnect

components products have to follow suit, advancing alongside the systems and

technologies they serve. As a result, interconnect components manufacturers

have pursued inorganic growth opportunities to strengthen product offerings

and manufacturing capacities.

With 67 transactions announced or closed in 2018, merger and acquisition

(M&A) activity modestly exceeded deal activity in 2017. Strategic buyers

continued to account for the majority of deal activity, representing 63.6% of

total transactions. However, private equity firms increased investment in the

sector, accounting for 36.4% of deal activity in 2018, compared to 23.4% in

2017. Through year-to-date 2019, 17 transactions have been announced or

closed, exceeding the same period in 2018 and setting the tone for another

robust year of M&A activity in the Interconnect Components industry. Notably,

RF Industries (Nasdaq:RFIL), a manufacturer of interconnect products and

systems, acquired C Enterprises, a manufacturer of cable assemblies in March

2019 (undisclosed).

TABLE OF CONTENTS

M&A Overview

Segment Highlight

Notable Transactions

Select Transactions

Firm Track Record

INTERCONNECT COMPONENTS

Q2 2019

MERGER & ACQUISTION OVERVIEW

Year-to-date (YTD) ended March 21

Source: Capital IQ, Pitchbook, FactSet, and Capstone Headwaters Research

CONTRIBUTORS

Todd McMahon

Managing Director

617-619-3334

tmcmahon@capstoneheadwaters.com

John Ferrara

Founder & CEO

617-619-3325

jferrara@capstoneheadwaters.com

Access to Key Inputs

Reliable access to low-

cost inputs enhances

margins and can reduce

uncertainty pertaining to

projected profitability.

SEGMENT HIGHLIGHT: WIRE & CABLE MANUFACTURING

The Wire & Cable Manufacturing industry is forecasted to

reach a market value of $15.7 billion by 2023, at an

annualized growth rate of 1.4%, according to IBISWorld.1

Favorable market dynamics such as a burgeoning US

construction sector, stabilizing input prices, and rising

demand among industrial manufacturers for turnkey wire

and cable assemblies are expected to support steady

growth.

Copper and aluminum are the key commodity inputs for

wire & cable manufacturers. The projected stabilization of

copper and aluminum market prices, modestly growing at

0.2% and 0.7% respectively from 2019 to 2025, serve as a

key tailwind for the segment. A reduction in price

volatility bodes well for operators, increasing transparency

and confidence into future cash flows and profitability.

Heightened confidence in pricing and sales projections

are expected to attract private equity buyers, rewarding

established businesses with premium valuations.

The Wire & Cable Manufacturing industry has a low level

of concentration, with the four largest operators

accounting for approximately 33% of market share in

2018. The remainder of the industry is highly fragmented

and consists of a large number of medium-sized

manufacturers, presenting ample inorganic growth

opportunities for strategic and private equity buyers.

Larger strategic buyers have targeted small to medium-

sized operators with efficient and technologically

advanced production capabilities. This provides larger

FORECASTED INDUSTRY

GROWTH (2018 TO 2023)1.4%

2

Niche Offerings

Operators with

differentiated product

offerings will attract

premium valuations in

the M&A market.

Economies of Scale

Larger operators can

negotiate lower input

prices with suppliers to

increase cost

competitiveness.

Contract-Based Service

Manufacturers that

establish contracts with

major clients can boost

sales and reduce revenue

volatility.

Key Investment Considerations

Low Capex, High Margin

Manufacturers that run

low-run, low capex

operations have seen

favorable M&A interest.

Efficient Technology

Cutting-edge technology

and processes promote

lower production costs

and new product

development.

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

($ P

er

Metr

ic T

on

)

Copper Aluminum

Copper and Aluminum Market Pricing

players with reduced input costs associated with vertical

integration and economies of scale, greater input

purchasing power, and stronger distribution channels.

Private equity buyers have also demonstrated increasing

appetite for the industry, seeking low-volume, high

margin operators. Premium assets have displayed

efficient production processes and facilities, low capex,

and niche products that are regulatory compliant.

Notably, High Road Capital acquired Radix Wire & Cable

in November 2018 (highlighted on following page) and

Behrman Capital acquired kSARIA, a producer of fiber

optic interconnect wire and cable harnesses, in October

2018 (terms undisclosed).

Source: IBISWorld

Interconnect Components | Q2 2019

Source: IBISWorld

Atlas Holdings LLC to acquire International Wire Group Holdings

(March 2019, $314.2 Million)

Atlas Holdings, through its affiliates, has entered into a definitive agreement to acquire International

Wire Group (OTKPK:ITWG) at an enterprise value of $314.2 million, equating to 7.1x EBITDA. Atlas, the

Greenwich, Connecticut-based private equity firm, will acquire all outstanding shares of International

Wire Group’s (IWG) common stock for $10.70 per share.2

IWG, together with its 15 subsidiaries, manufactures wire products, including bare, silver-plated, nickel-

plated, and tin-plated copper wire, engineered wire products, and high-performance conductors. The

company serves customers primarily in the Industrial & Energy, Electronics & Data Communication,

Automotive, Aerospace & Defense, Medical Products, and Appliance industries. The well-established

subsidiaries of IWG will provide Atlas with 17 manufacturing facilities and a robust suite of offerings,

adding to Atlas’ portfolio of 18 manufacturing and distribution businesses.

Amphenol Corporation acquires Controls Technologies Division of SSI Technologies

(November 2018, $400.0 Million)

Amphenol (NYSE:APH), a leading manufacturer of electrical, electronic, and fiber optic connectors,

interconnect systems, and other sensor-based products, has agreed to acquire the Control

Technologies division of SSI Technologies for approximately $400 million or 2.2x revenue.

Founded in 1974, SSI is a leading designer and manufacturer of sensors and sensor solutions, serving

global Automotive and Industrial markets. With annual sales of approximately $180 million, SSI’s

Control Technologies division provides Amphenol with highly complementary product offerings that are

expected to be accretive to earnings per share within the first year post acquisition.

“We believe that SSI’s product offerings are uniquely complementary to our existing offerings and

represent a significant long-term growth opportunity driven by the expansion of electronics across a

broad set of applications in the Automotive and Industrial markets,” Adam Norwitt, Amphenol’s

President and CEO, in a press release.3

High Road Capital Partners acquires Radix Wire Co.

(November 2018, Undisclosed)

High Road Capital, a New York-based private equity firm, has acquired Radix Wire, a manufacturer of

high-temperature and fire-resistant wire and cable products. Radix’s President, Steve Demko, as well as

its senior management team have invested in the transaction and have renamed the business as Radix

Wire & Cable to better reflect its product portfolio.4

Cleveland, Ohio-based Radix is a leading manufacturer of niche wire and cable products, proven to

perform in temperatures from 15 to 1000 degrees Celsius. Radix’s products serve diverse industrial

original equipment manufacturing (OEMs), maintenance, repair, and operations (MRO), and fire

protection applications. Its comprehensive suite of branded products meet stringent regulatory

requirements for Underwriters Laboratories (ULs) and are Canadian Standards Association certified as

well as UL Vertical Wire-1 flame rated certified. High Road Capital views Radix’s niche area of

operations as a high growth segment which can expand into underpenetrated end-markets through

inorganic growth opportunities in adjacent product categories. High Road’s infusion of capital is

expected to accelerate growth, expand product offerings, and increase manufacturing capacity.

Several notable transactions have already been announced or completed in the industry in 2018 and Q1 2019. Select transactions

are outlined below, followed by a more comprehensive list on the following pages.

Acquires

Acquires

Acquires

3

NOTABLE TRANSACTIONS

Interconnect Components | Q2 2019

Enterprise EV / LTM

Date Target Acquirer Target Business Description Value (mm) Revenue EBITDA

03/13/19 Boltswitch SOCOMEC Manufactures bolted pressure contact switches. - - -

03/11/19Assets of C

EnterprisesRF Industries Produces cable assemblies. - - -

03/08/19International Wire

GroupAtlas Holdings Manufactures wire and engineered wire products. - - -

03/04/19General

PhotonicsLuna Innovations

Develops photonic components and fiber optic

instruments for fiber optic networks.$20.0 - -

03/04/19Optimum

Fiberoptics

Reichle &

De-Massari

Manufactures and supplies fiber management

products such as fiber optic cable and connectors. - - -

02/28/19TTM

Technologies

Linkage

TechnologiesProduces printed circuit board products. - - -

02/27/19 CCPI VesuviusManufactures thermocouple assemblies, connectors,

and fittings. $43.4 1.2x 8.0x

01/25/19Wavelength

ElectronicsAPC Technology

Manufactures laser diode drivers and temperature

controllers for electro-optical OEMs.- - -

01/10/19Functional

DevicesShorehill Capital

Produces electronic devices such as relays, sensors,

transformers, power control, and power supplies. - - -

01/08/19General

Microcircuits

East West

Manufacturing

Delivers integrated components, electronic assemblies

and value-add solutions to industrial markets- - -

12/12/18Axsun

Technologies

Excelitas

Technologies

Manufactures photonic products based on micro-

electro-mechanical systems (MEMS). - - -

12/12/18 Sparton Cerberus CapitalProduces printed circuit card assemblies, sub-

assemblies, full assemblies, and cable/wire harnesses. $255.3 0.7x 9.1x

12/07/18Streamline

Circuits

Summit

Interconnect

Manufactures rigid, rigid flex, and multilayer flex

printed circuit boards- - -

11/30/18 Milrail TPC Wire & CableManufactures wire, cable, and interconnect devices for

industrial, transit, and military customers. - - -

11/27/18SSI Controls

TechnologiesAmphenol

Produces custom sensor solutions for a wide range of

markets. $400.0 2.2x -

11/09/18 Finisar II-VI Provides fiber optical modules and components. $2,657.5 2.1x -

11/02/18Radix Wire

& CableHigh Road Capital

Manufactures high-temperature and fire-resistant

electrical wires and cables. - - -

11/01/18 Assets of KanthalOhmite

Manufacturing

Provides a full line of ceramic non-inductive resistors

as well as Maxcap double layer capacitors. - - -

11/01/18 RPC Photonics Viavi SolutionsDesigns and manufactures optical components with

precision structured surfaces. - - -

11/01/18 Forza Silicon AMETEK Manufactures custom integrated circuits. $40.0 - -

10/30/18 Electro Scientific Mks InstrumentsManufactures interconnect, semiconductor, and

component products. $928.3 2.2x 7.1x

Source: Capital IQ, Pitchbook, FactSet, and Capstone Headwaters Research4

SELECT TRANSACTIONS

Interconnect Components | Q2 2019

PUBLIC COMPANY TRADING & OPERATING DATA

Price % 52 Wk Market Enterprise LTM EV / LTM

Company 03/26/19 High Cap Value Revenue EBITDA Margin Revenue EBITDA

Amphenol Corporation $94.18 96.5% $28,073.9 $30,400.1 $8,202.0 $1,987.7 24.2% 3.7x 15.3x

Belden Inc. $53.73 70.3% $2,116.9 $3,160.0 $2,585.4 $463.1 17.9% 1.2x 6.8x

CommScope Holding Company $20.84 50.1% $4,009.2 $7,536.9 $4,568.5 $870.3 19.0% 1.6x 8.7x

Corning Inc. $33.74 92.3% $26,493.3 $32,530.3 $11,290.0 $3,276.0 29.0% 2.9x 9.9x

Hubbell Inc. $115.10 83.6% $6,273.6 $7,886.9 $4,481.7 $720.4 16.1% 1.8x 10.9x

Littelfuse, Inc. $182.76 76.8% $4,516.0 $4,721.1 $1,718.5 $364.6 21.2% 2.7x 12.9x

Methode Electronics, Inc. $27.63 60.8% $1,021.9 $1,251.1 $983.3 $161.0 16.4% 1.3x 7.8x

Prysmian S.p.A $19.02 62.2% $5,004.1 $7,747.6 $11,739.2 $707.6 6.0% 0.7X 10.9x

TE Connectivity Ltd. $81.08 79.0.% $27,426.0 $30,952.0 $13,999.0 $3,099.0 22.1% 2.2x 10.0x

Mean 19.1% 2.0x 10.4x

Median 19.0% 1.8x 10.0x

Harmonic Mean 15.9% 1.6x 9.8x

EV = enterprise value; LTM = last twelve months

$ in millions, except per share data

32.4%

40.2%37.0%

39.5%

29.2%

40.1%

26.8%

34.3% 33.5%

24.2%

17.9%19.0%

29.0%

16.1%

21.2%

16.4%

6.0%

22.1%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Amphenol

Corporation

Belden Inc. CommScope Corning Hubbell Littelfuse Methode

Electronics

Prysmian TE Connectivity

Gross Margin % EBITDA Margin %

Last Twelve Month Margin Performance

Source: Capital IQ and Capstone Headwaters Research as of March 26, 2019 5

17.0%

8.2%

0.2%

11.6%

22.2%

40.7%

11.9%

28.6%

12.4%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

Amphenol

Corporation

Belden Inc. CommScope Corning Hubbell Littelfuse Methode

Electronics

Prysmian TE Connectivity

Last Twelve Month 1-Year Revenue Growth

Interconnect Components | Q2 2019

6

FIRM TRACK RECORD: SELECT CONNECTIVITY AND EMS TRANSACTIONS

CYPRESS

HOLDING LTD

valuation & financial advisory has been acquired byhas been acquired byhas been acquired by

has been acquired by has been acquired byhas recapitalized withhas been acquired by

has been acquired by

has sold certain assets to

has recapitalized withhas been acquired by

a subsidiary of

has been acquired by has been acquired by

has acquired certain

assets of

has been acquired by

Interconnect Components | Q2 2019

1. IBISWorld, “Wire & Cable Manufacturing in the US,” https://clients1.ibisworld.com/reports/us/industry/

default.aspx?entid=804, accessed March 27, 2019.

2. Business Wire, “International Wire Group to Be Acquired by Affiliates of Atlas Holdings,” https://www.businesswire.com

/news/home/20190308005272/en/International-Wire-Group-Acquired-Affiliates-Atlas-Holdings, accessed March 27,

2019.

3. Business Wire, “Amphenol Corporation Announces Definitive Agreement to Acquire SSI Controls Technologies,”

https://www.businesswire.com/news/home/20181127005172/en/Amphenol-Corporation-Announces-Definitive-

Agreement-Acquire-SSI, accessed March 27, 2019.

4. The PE Hub Network, “High Road buys Radix Wire,” https://www.pehub.com/2018/11/high-road-buys-radix-wire/,

accessed March 28, 2019.

7

CITATIONS

Disclosure: This report is a periodic compilation of certain economic and corporate information, as well as completed and announced merger and acquisi-

tion activity. Information contained in this report should not be construed as a recommendation to sell or buy any security. Any reference to or omission of

any reference to any company in this report should not be construed as a recommendation to buy, sell or take any other action with respect to any security of

any such company. We are not soliciting any action with respect to any security or company based on this report. The report is published solely for the

general information of clients and friends of Capstone Headwaters. It does not take into account the particular investment objectives, financial situation or

needs of individual recipients. Certain transactions, including those involving early-stage companies, give rise to substantial risk and are not suitable for all

investors. This report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied

upon as such. Prediction of future events is inherently subject to both known and unknown risks and other factors that may cause actual results to vary

mate- rially. We are under no obligation to update the information contained in this report. Opinions expressed are our present opinions only and are

subject to change without notice. Additional information is available upon request. The companies mentioned in this report may be clients of Capstone

Headwaters. The decisions to include any company in this report is unrelated in all respects to any service that Capstone Headwaters may provide to such

company. This report may not be copied or reproduced in any form, or redistributed without the prior written consent of Capstone Headwaters. The

information contained herein should not be construed as legal advice.

Interconnect Components | Q2 2019

Todd McMahon

Managing Director

tmcmahon@capstoneheadwaters.com | 617-619-3334

Todd possesses over 20 years of transaction, financial services and corporate executive experience. Prior

to Capstone, Todd was President of Array Financial Services, a Boston based boutique M&A advisory

firm he founded in 2002. He began his career at Putnam Investments, later moving to Bank Boston’s

investment banking group. Later, Todd served as Managing Director at Ross Crossland Weston/RCW

Mirus, where he was responsible for managing the firm’s technology investment banking practice.

Todd’s investment banking experience is complemented by his involvement as an entrepreneur and

investor where he was involved in various consolidation transactions, raised over $30mm of debt and

equity financing and was responsible for managing all aspects of operations. He earned his MBA from

Boston University and his BA from the University of Massachusetts.

John Ferrara

Founder & CEO

jferrara@capstoneheadwaters.com | 617-619-3325

John is the Founder and CEO of Capstone Headwaters and is responsible for the firm’s investment and

merchant banking operations, as well as managing client transactions. John has executed well over 150

transactions and related engagements and his entrepreneurial endeavors have included serving as a

founding member of seven financial service practices and a principal shareholder in five startup

businesses. Under his leadership, Capstone has expanded to 10 offices in the US and UK with an

international platform that spans 450 professionals in 40 countries worldwide.

Prior to 2002, when he acquired the practice he initially founded from Arthur Andersen to form

Capstone, John served as a Regional Managing Partner with Andersen Corporate Finance LLC. While

with Andersen, John held various national and global leadership positions. He started his career in

Lehman Brothers' M&A group in New York, London and Riyadh, later becoming a founding member of

Rodman & Renshaw's M&A practice in New York. After a break to compete in Australia's semi-

professional baseball league, John joined The Deloitte Consulting Group in Los Angeles to focus on

turnaround and interim management engagements.

INTERCONNECT COMPONENTS REPORT CONTRIBUTORS

8

Interconnect Components | Q2 2019

MIDDLE MARKET INVESTMENT BANK OF THE YEAR

2017

US - DEBT FINANCING ADVISORY OF THE YEAR

2018

US MIDDLE MARKETS INVESTMENT BANK OF THE YEAR

2018

INVESTMENT BANKING FIRM OF THE YEAR

2019

TURNAROUND AWARDS

12

www.capstoneheadwaters.com

Capstone Headwaters is an elite investment banking firm dedicated to serving the corporate finance needs of middle market

business owners, investors and creditors. Capstone Headwaters provides merger & acquisition, private placement, corporate

restructuring and financial advisory services across 16 industry verticals to meet the life cycle needs of emerging enterprises.

Headquartered in Boston, MA and Denver, CO, Capstone Headwaters has 19 offices in the US, UK and Brazil with a globalreach that includes over 450 professionals in 40 countries.

BUILT FOR THE MIDDLE MARKET

UNITED STATES

160+ professionals

17 offices

Boston Boise Burlington Chicago

Dallas Denver Greenwich Houston

Los Angeles New York Orange

County Philadelphia San Diego

San Francisco St Louis Tampa

Washington DC

INTERNATIONAL

450+ professionals

60+ offices in 40 countries

Asia: China India Japan

Latin America: Argentina Brazil Chile Colombia Mexico Peru

Africa: Congo Egypt Ghana Ivory Coast Mauritius Morocco Senegal South Africa

Europe: Belgium Bosnia Croatia Czech Republic Finland France Germany Herzegovina

Hungary Ireland Italy London Netherlands Norway Poland Russia Serbia Slovenia

Spain Sweden Switzerland Turkey United Kingdom