The companies entered into a definitive merger agreement under which Prysmian will acquire 100% of the outstanding shares of General Cable at $30.00 per share in cash.
The combined company brings together complementary geographical footprints, which includes increasing the exposure of Prysmian Group to North America. In May, Prysmian Group was awarded a three-year $300 million optical cable supply contract from Verizon Communications, which will see the Group supply more than 17 million fibre km of ribbon and loose tube cables.
“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.”
Prysmian expects the combined group to generate run-rate pre-tax cost synergies of approximately €150 million within five years following closing mainly from procurement, overhead costs savings and manufacturing footprint optimisation, “with a substantial proportion coming in the first three years,” said Battista in a recent conference call. One-off integration costs are estimated at approximately €220 million.
The transaction, which has been unanimously approved by each company’s Board of Directors and recommended to its shareholders by General Cable’s Board of Directors, is expected to close by the third quarter of 2018, subject to the approval of General Cable’s shareholders representing at least a majority of the outstanding shares, regulatory approvals, and other customary conditions.
The transaction is expected to be entirely funded with a mix of newly committed debt facilities and cash on balance / existing committed credit lines. “Post-closing equity instruments issuance up to €500 million will be considered to retain a flexible capital structure to pursue future growth opportunities by external lines,” added Battista on the conference call.
Answering a question in the Q&A session, Battista alluded to the fact that there were three other groups looking for a position in a deal, including Chinese interest but “we remained the sole bidder”. NKT and Nexans are rumoured to have been two of the companies initially interested in a potential deal.
Michael T. McDonnell, president and chief executive officer of General Cable, added: “This combination is an ideal strategic fit and ensures we are well-positioned to meet the future opportunities and challenges in the dynamic and evolving wire and cable industry. Together, we will be able to deliver a robust portfolio of products and services and new product innovation across the full breadth of the wire and cable industry globally. Importantly, Prysmian and General Cable have a shared vision and highly compatible cultures founded on similar values.”
The combined group will be present in more than 50 countries with approximately 31,000 employees.
