Prysmian to Acquire General Cable for up to USD3 Billion

Published: Dec 03 2017
Deal Summary

Prysmian S.p.A. (Prysmian Group), a company engaged in energy and telecom cables and systems industry, has entered into a definitive agreement to acquire General Cable Corporation, a manufacturer of wires and cables, for a purchase consideration of USD30 per share, in cash. The transaction will be financed by Prysmian through a mix of new debt, cash on hand and existing credit lines, resulting in anticipated pro forma net leverage for the combined group of 2.9x Net Financial Position over adjusted EBITDA LTM 3Q-2017 PF.

Under the terms, the transaction values General Cable at approximately USD3 billion, including debt and certain other liabilities, and represents a premium of approximately 81% to General Cable’s closing price of USD16.55 per share on July 14, 2017, the last day of trading before General Cable announced its review of strategic alternatives. Based on pro forma aggregated results for the 12 months ended September 30, 2017, the combined group would have had sales of over EUR11 billion (USD13.08 billion) and adjusted EBITDA of approximately EUR0.93 billion (USD1.1 billion). Following the transaction, the combined group will be present in more than 50 countries with approximately 31,000 employees. Prysmian expects the combined group to generate run-rate pre-tax cost synergies of approximately EUR150 million (USD178.38 million) within five years following closing mainly from procurement, overhead costs savings and manufacturing footprint optimization. The transaction is expected to generate EPS accretion in the range of 10-12% for Prysmian shareholders already within the first year following closing (excluding cost synergies and before related implementation costs). The transaction may be terminated by each of the company under certain circumstances, including if the acquisition is not consummated by June 3, 2018 (subject to one 90-day extension that may be elected by the company if certain regulatory approvals required in connection with the transaction have not been obtained). The transaction provides for certain other customary termination rights for the company, subject to the payment of a termination fee in the amount of USD47 million in certain circumstances, including if the company terminates the transaction in order to accept a superior proposal for an alternative business combination transaction of the type described in the relevant provisions of the transaction. The parties to the transaction are also entitled to an injunction or injunctions to prevent breaches of the transaction, and to specifically enforce the terms and provisions of the transaction.

The transaction has been unanimously approved by each company’s board of directors and recommended to its shareholders by General Cable’s board of directors. As part of the transaction, board of directors of has requested the group CFO to analyze the opportunity to implement over the next 12 months a rights issue or other comparable structures for an aggregate maximum amount of EUR500 million (USD594.6 million).

Goldman Sachs International and Mediobanca – Banca di Credito Finanziario S.p.A are acting as financial advisors, and Wachtell, Lipton, Rosen & Katz is acting as legal advisor to Prysmian, while J.P. Morgan Securities LLC is acting as financial advisor and Sullivan & Cromwell LLP is acting as legal advisor to General Cable for the transaction.

The acquisition will enable Prysmian to enhance its position in the sector, by increasing its presence in North America and expanding its footprint in Europe and South America.

The transaction 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.

Deal History:

Planned: On July 16, 2017, General Cable intended to sell its self. The board of directors of the company initiated a review of strategic alternatives to maximize shareholder value, including its potential sale.

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