Target Company Information

Sun European Partners, LLP, a prominent private investment firm focused on defensible businesses with significant growth potential, has finalized the sale of C&K, a distinguished manufacturer of high-quality electromechanical switches. C&K, established in 1928 and headquartered in Waltham, Massachusetts, operates facilities across the globe, including in France, Germany, India, Vietnam, and China. The company is recognized as a leading global provider of advanced electromechanical switches and interface technology solutions, catering to essential applications across various sectors such as industrial, transportation, aerospace, and datacom.

Since its acquisition by Sun European Partners in September 2017, C&K has experienced substantial growth, nearly doubling its EBITDA and enhancing its EBITDA margin by over 400 basis points. These accomplishments are attributable to Sun European’s strategic value creation and operational initiatives, which included the establishment of a more agile sales function, investment in new machinery for product development, and the cultivation of a culture centered around continuous improvement within the workforce.

Industry Overview

The global market for electromechanical switches is experiencing significant growth, fueled by advancements in technology and increasing demand for automation across various industries. In the United States, the demand for high-quality switches is driven by applications in automotive, aerospace, telecommunications, and industrial machinery sectors. Given its robust manufacturing capabilities and innovative products, C&K is well-positioned to capitalize on these trends, enhancing its competitive stance within the market.

Moreover, the aerospace and defense sectors are becoming increasingly reliant on specialized components that meet stringent safety and performance standards. With two strategic acquisitions—Vuillermoz and EIS Electronics—C&K augmented its capabilities in micro-mechanical components and cable assemblies, further entrenching its presence in these high-growth markets.

The rising focus on sustainability and connected technology also plays a pivotal role in shaping the industry's landscape. Companies are investing heavily in R&D to develop electromechanical switches that not only meet operational requirements but also contribute to greener and smarter solutions. As a leader in this field, C&K stands to benefit from these industry shifts.

Rationale Behind the Deal

The decision to sell C&K to Littelfuse, Inc. for a total enterprise value of $540 million reflects a strategic move to position the company for continued growth under new ownership. Littelfuse, an industrial technology manufacturing company, aims to leverage C&K’s innovative products and market presence to enhance its own portfolio, emphasizing a shared commitment to sustainability and safety.

Under the guidance of Sun European Partners, C&K has made remarkable strides in operational excellence and market leadership. The sale represents a successful culmination of these efforts, enabling both the company and its new owners to pursue additional opportunities for expansion and innovation.

Investor Information

Littelfuse, Inc. is a key player in the industrial technology sector, known for its commitment to empowering a sustainable, connected, and safer world. As a publicly-traded company on NASDAQ under the ticker LFUS, Littelfuse has a strong track record of strategic acquisitions that enhance its technology portfolio and broaden its market reach. The company’s focus on innovation and customer satisfaction aligns well with C&K’s operational ethos.

With C&K’s established reputation and successful track record in the electromechanical switch market, Littelfuse is well-positioned to integrate C&K’s capabilities and drive synergies that can lead to enhanced product offerings and market growth.

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From an investment perspective, the acquisition of C&K by Littelfuse presents a compelling opportunity. The company's successful operational enhancement and growth trajectory under Sun European's stewardship suggest that C&K is now a robust and strategically positioned entity ready to scale further, particularly in the aerospace and defense sectors that are witnessing increased demand.

The two strategic acquisitions made during Sun European's ownership have not only expanded C&K's capabilities but also mitigated previous operational bottlenecks, thereby improving overall efficiency. Littelfuse’s intention to harness C&K’s expertise in such a technologically advanced industry indicates a positive outlook for future growth and profitability.

Furthermore, the operational expertise and industry knowledge that Littelfuse brings could provide additional benefits, helping C&K to thrive in an evolving marketplace. This deal can be seen as a win-win, enhancing value for shareholders while ensuring that C&K continues to lead in delivering high-quality electromechanical solutions.

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