Prysmian to pay $3 billion for General Cable

Prysmian Group (BIT: PRY) has agreed to acquire fellow cable maker General Cable Corp. (NYSE: BGC) for $30.00 per share. The all-cash offer equates to a total transaction value of approximately $3 billion, including debt and certain other General Cable liabilities. The parties hope to close the merger by the second quarter of calendar 2018.

Prysmian Group (BIT: PRY) has agreed to acquire fellow cable maker General Cable Corp. (NYSE: BGC) for $30.00 per share. The all-cash offer equates to a total transaction value of approximately $3 billion, including debt and certain other General Cable liabilities. The parties hope to close the merger by the second quarter of calendar 2018.

The announcement brings to a close the review of strategic alternatives General Cable announced this past July (see "General Cable reviewing strategic alternatives"). "While the management team has made excellent progress in the execution of our strategic roadmap to transform the company into a more focused, efficient, and innovative organization, we expect the industry to consolidate over time and believe the review at this time is in the best interests of shareholders," said the company's John E. Welsh, III, at the time. Welsh is non-executive chairman of the board at General Cable.

And so General Cable becomes part of the expected industry consolidation. The combined companies would have had sales of over €11 billion and adjusted EBITDA of approximately €930 million based on pro forma aggregated results for the 12 months ended September 30, 2017. The combination will have approximately 31,000 employees to start. Prysmian says it expects the resultant company to generate run-rate pre-tax cost synergies of approximately €150 million within five years following closing. The savings will come mainly from procurement, overhead costs reductions, and manufacturing footprint "optimization." One-off integration costs are estimated at approximately €220 million.

Prysmian expect the deal to improve earnings per share by 10-12% within the first year following closing, excluding cost synergies and before related implementation costs. The addition of General Cable also will enhance Prysmian's reach into North America, Europe, and South America, according to Valerio Battista, Prysmian Group CEO.

The $30.00 per share offer represents a premium of approximately 81% to General Cable's closing price of $16.55 per share on July 14, 2017, which was the last day of trading before General Cable announced its strategic review. Prysmian says it plans to finance the deal via a mix of new debt (for which Prysmian has received lender commitments), cash on hand, and existing credit lines. Prysmian also has instructed the group's chief financial officer to assess the implementation sometime within the next 12 months of a rights issue or other comparable structures to raise an aggregate maximum amount of €500,000,000.

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