Prysmian will finance the transaction through a mix of EUR 1.1 billion in cash and new debt facilities of EUR 3.4 billion. The transaction has been approved by the boards of directors of each company and is expected to close in the second half of 2024, subject to regulatory and shareholder approvals.
The synergies
.Prysmian estimates that, post-integration, the group will be able to generate approximately Euro 140 million in synergies when fully implemented and before tax effects, within four years of completion of the transaction. Extraordinary integration costs are estimated at approximately 1.2-1.3x synergies when fully implemented and before tax effects. For Prysmian shareholders, the acquisition is expected to result in 30% growth in earnings per share including the impact of synergies when fully implemented, and 20% without the impact of synergies. The pro-forma net financial position post-acquisition will be about EUR 5.1 billion. Thanks to the combined group's strong cash generation, further accelerated by the synergies generated, Prysmian will benefit from rapid deleveraging and expects to return to a leverage ratio similar to the December 2023 level by 2027. The transaction is expected to be finalised in the second half of 2024.
Battaini: "Strategic acquisition"
."The acquisition of Encore Wire represents a milestone for Prysmian and a unique strategic opportunity to create value for our shareholders and customers," commented Massimo Battaini, Prysmian's CEO-designate, in a statement. "Through this acquisition, Prysmian will increase its position in North America, further enhancing its geographic and business mix and strengthening the company's exposure to long-term trends."
Encore Wire is a leading manufacturer of a wide range of copper and aluminium electrical wires and cables. Prysmian's diversified product portfolio and low production costs position it exceptionally well to play a key role in the transition to a more sustainable and reliable energy infrastructure, says a Prysmian note. In 2023, the company reported revenues of approximately USD 2.6 billion and EBITDA of USD 517 million. Strategically, Encore Wire the deal will allow Prysmian to increase its presence in secular growth trends and increase its exposure in North America by expanding Prysmian's product offering. Approximately 140 million Ebitda synergies are expected within four years of closing.
"This transaction maximises value for Encore Wire's shareholders and recognises them a substantial premium for their shares over stock prices," said Daniel L. Jones, Encore Wire's president and chief executive officer. "Encore Wire and Prysmian are two complementary organisations and we are confident that Encore Wire will have a bright future as part of the Prysmian Group," he said. Following the completion of the transaction, Prysmian expects to maintain a significant presence at Encore Wire's single, integrated model site in McKinney, Texas.
