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Molex Incorporated recently announced that it has acquired Affinity Medical Technologies LLC, a manufacturer of customized medical interconnect products. The financial terms of the deal were not disclosed.

Costa Mesa, California-based, Affinity Medical Technologies’ product line includes cable assemblies, connectors and electronic interfaces for medical device manufacturers. The company offers high quality products, which are used in almost every area of medical monitoring that complements Molex’s product line beautifully, while enabling it to expand into the medical vertical.

Despite this product depth, Affinity has smaller scale than Molex, so the latter’s geographical reach is expected to help the combined company grow faster. To Affinity’s credit, it does have a good client base and solid relationships that Molex expects to make the most of.

Management stated that Affinity Medical Technologies will now operate as a subsidiary of Molex and will be a part of the company’s Cable Products Group within the Global Integrated Products Division.

The medical electronics sector is a complex and fragmented market. The interconnect technology segment in particularis one where product differentiation too extremely difficult, so the dangers of increasing competition and market share losses are omnipresent. Since growing an interconnect technology business is rather difficult, companies in the segment often resort to acquisitions to expand into an adjacent area with good growth potential. Molex’s acquisition of Affinity should help the company in this respect.

Currently, the medical electronics market is valued at approximately $128.6 billion, and is expected to reach a market size of about $191.1 billion by 2015, according to the data released at the Medical electronics web conference held in September.

Molex is a leading supplier of electronic and electrical components. The company is also a major player in the connector market in particular, where it has close to a 5% market share. The company’s fourth quarter 2012 revenue was $858.5 million, up 2.6% sequentially.

Increasing competition from Amphenol Corporation (APH - Analyst Report), Methode Electronics, Inc. (MEI - Snapshot Report) and TE Connectivity Ltd. (TEL - Analyst Report) remain as strong as ever.

Molex has a Zacks #4 Rank, which implies a Sell rating in the short term (1-3 months).

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