JUNE 29, 2009 By Stephen Hardy -- Fiber and cabling giants Draka Holding N.V. (search Lightwave for Draka) and Prysmian SpA (search Lightwave for Prysmian) have confirmed that they are in the midst of merger talks that would combine the companies under the Prysmian name.
Saying that the company's leadership "are of the opinion that confidentiality might no longer be safeguarded and believe there might be a high risk of leaks that would trigger market speculation," Draka made its announcement first. The two companies have discussed "a share for share cross-border statutory merger with Prysmian as surviving entity," Draka said. Prysmian followed suit with its release, noting the fact that Draka had already disclosed the talks with its release.
The talks appear to be going well. "Any such combination would be in the interest of all stakeholders, including the shareholders of both companies, and is likely to be largely based on their respective market capitalizations," said both companies in their obviously coordinated releases.
The two companies noted that the merger talks are preliminary and any potential agreement must be approved by the firms' respective boards. It also would be subject to shareholder approval, financing, and employee consultation procedures, among others.
"At this stage there is no assurance that a transaction of any kind will take place," both releases stressed.
While both companies make products other than fiber and fiber cabling, any tie up would significantly change the market landscape within optical infrastructure supply. The two companies' combined 2008 revenue would have exceeded $10 billion, notes CRU/KMI Research analyst Richard Mack.