Prysmian to buy Encore Wire in €3.9b deal

ROME: Prysmian, the world’s largest cablemaker, will acquire US firm Encore Wire for an enterprise value of €3.9 billion (RM19.8 billion), the two companies said yesterday.

“Through this acquisition, Prysmian will grow its North American presence, enhancing its portfolio and geographic mix,” chief operating officer and CEO-designate Massimo Battaini said.

The deal comes as a surprise as the Italian company said last year it was focused on organic growth with scope for only “bolt-on” acquisitions in specific market segments or geographies using a war chest of around €1.1 billion.

Battaini will be appointed CEO at the group’s shareholders meeting on Thursday, inheriting the role from Valerio Battista, who has led Prysmian since its creation in 2005 after a spin-off from the Pirelli group.

It has since made two large acquisitions, Netherlands-based Draka in 2011 and US-based General Cable in 2018.

Based on the definitive merger agreement they announced yesterday, Prysmian will buy Encore Wire for US$290 per share in cash, an 11% premium to the stock’s close on Friday.

The deal will also allow Prysmian to broaden its product offering, the companies said.

Encore Wire, which produces a broad range of copper and aluminum electrical wire and cables, supplying power generation and distribution solutions, posted revenue of around US$2.6 billion last year with core earnings (EBITDA) of US$517 million.

Prysmian reported revenue of €15.4 billion and an adjusted EBITDA of €1.6 billion.

Prysmian will finance the transaction through a mix of €1.1 billion in cash and newly committed debt facilities of €3.4 billion, the company said.

Both boards have approved the transaction which is expected to close in the second half of this year, subject to regulatory and shareholder approvals. – Reuters