Prysmian to buy Encore Wire in $4.2 bln deal boosting North America exposure

Prysmian, the world’s largest cablemaker, will acquire U.S. firm Encore Wire for an enterprise value of about 3.9 billion euros ($4.15 billion), the two companies said on Monday.

“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 euros.

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 U.S.-based General Cable in 2018.

Based on the definitive merger agreement they announced on Monday, Prysmian will buy Encore Wire for $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 $2.6 billion last year with core earnings (EBITDA) of $517 million.

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

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

Both boards have approved the transaction which is expected to close in the second half of 2024, subject to regulatory and shareholder approvals.