Prysmian Group, headquartered in Italy, said it is buying U.S.-based General Cable Corp. for $30 a share in cash, or approximately $3 billion in total.
Consolidation in the cable industry may have slowed, but it is far from over, and that’s as true of equipment and infrastructure providers as it is of the service providers themselves.
General Cable had been looking for a buyer as of early this summer, when it announced its review of strategic alternatives. At the time, the company was two years into the process of a restructuring, necessitated by declines in sales that stretched back to 2013.
Last year, the company also agreed to pay the SEC over $80 million in fines in a foreign corruption case over activities from 2002 to 2013.
When the company announced its strategic review, CEO Michael T. McDonnell said restructuring efforts had been successful, but he also said the industry was consolidating and the company wanted to pursue “maximizing shareholder value” by selling the company.
The closing price of the company’s stock was $16.55 per share on July 14, 2017, the last day of trading before the strategic review was announced.
Prysmian jumped in. While General Cable sells coaxial cable and Ethernet wiring in addition to undersea cable, Prysmian’s interest may be less in the communications market than in the electric utility industry. General Cable also sells cabling to utilities, and the internet of things and the increasing reliance on electric power for vehicles suggests that segment, especially in the U.S., is primed for growth.
Prysmian pointedly noted that the deal increases its presence in North America and expands its footprint in Europe and South America.
The transaction, unanimously approved by both companies' boards of directors, is expected to close by the third quarter of 2018, subject to the usual set of shareholder and regulatory approvals.
The combined group would have had sales of over $13 billion, with operations in more than 50 countries and approximately 31,000 employees.
In a statement, McDonnell said, “This combination is an ideal strategic fit and ensures we are well-positioned to meet the future opportunities and challenges in the dynamic and evolving wire and cable industry. Together, we will be able to deliver a robust portfolio of products and services and new product innovation across the full breadth of the wire and cable industry globally. Importantly, Prysmian and General Cable have a shared vision and highly compatible cultures founded on similar values.”