December 4, 2017
Prysmian has agreed to buy rival General Cable for USD 3 billion including debt, creating a new powerhouse in the energy and telecom cable market. The offer of USD 30 per share cash is an 81 percent premium on General Cable’s share price in July when the company announced it was considering strategic alternatives.
General Cable’s board is recommending the deal to shareholders, and the takeover is expected to close by Q3 2018, pending regulatory approval. At least a majority of General Cable’s shareholders also need to approve the sale at a special meeting.
The two companies generated pro forma combined sales of over EUR 11 billion and adjusted EBITDA of EUR 930 million for the 12 months to September. The group will be present in more than 50 countries with approximately 31,000 employees. Prysmian expects the combined group to generate pre-tax cost synergies of EUR 150 million per year within five years following closing, mainly from procurement, overhead costs savings and manufacturing footprint optimization. General Cable should add 10-12 percent to Prysmian’s net earnings already in the first year, it said.
The transaction will be financed through a mix of new debt (for which Prysmian has received lender commitments), cash on hand and existing credit lines, resulting in anticipated pro forma net leverage for the combined group of 2.9x. Prysmian said it will also consider a rights issue of up to EUR 500 million in the next 12 months.
Other interested bidders in General Cable were thought to include Nexans, NKT and potential Chinese bidders. Sources familiar with the matter told Reuters that Prysmian is also working on a bid to buy Nokia’s Alcatel Submarine Networks. ASN is valued at about EUR 800 million.