Prysmian to acquire General Cable for $3B in cash
The world’s largest cable systems company will become even larger when Prysmian Group completes its planned acquisition of General Cable, announced this week.
Prysmian Group has signed a definitive agreement to acquire General Cable for $30 per share in cash, in a deal that values General Cable at $3 billion, including debt and certain liabilities. The transaction, which has already been approved by the boards of both parties, is expected to close by the third quarter of 2018.
“The acquisition of General Cable represents a landmark moment for Prysmian Group and a strategic and unique opportunity to create value for our shareholders and customers” said Valerio Battista, Prysmian Group CEO. “Through the combination of two of the premier companies in the cable industry we will be enhancing our position in the sector, by increasing our presence in North America and expanding our footprint in Europe and South America”
Based on results for the quarter ended on 30 September 2017, the combined company would have had annual revenues of $11.1 billion and adjusted earnings before tax of about €930 million. Post acquisition, Prysmian will be present in more than 50 countries and have approximately 31,000 employees.
The acquisition price represents a premium of approximately 81 per cent to General Cable’s closing price of $16.55 per share on July 14, 2017, the last day of trading before the company announced that it was considering a sale.
General Cable is pleased with the outcome. John E. Welsh, III, non-executive chairman of the board of General Cable, stated: “Today’s announcement is the culmination of a thorough and robust review of strategic alternatives undertaken by the General Cable Board of Directors. We are confident that this transaction maximises value for our shareholders”
Prysmian said the combination represents an ideal strategic fit that will better position the company to meet new opportunities and challenges in the evolving wire and cable worldwide industry. Both companies address the energy and communications markets and receive similar proportion of revenue from telecom cables, approximately 15 per cent.
Prysmian Group was created in July 2005 when Pirelli’s cable and systems business spun out from its parent. The group went public in 2010, before acquiring Dutch rival Draka for $900 million in 2011 to become the world’s number one in this market. Meanwhile, Kentucky-headquartered General Cable is currently number four, behind France’s Nexans and US-based Southwire.
Prysmian expects the combined group to generate run-rate pre-tax cost synergies of about €150 million within five years of the closing the deal, mainly from procurement, overhead costs savings and ‘manufacturing footprint optimisation’. One-off integration costs are estimated at approximately €220 million.