News of Prysmian’s April 15 agreement to acquire Encore Wire for approximately $3.9 billion—the largest-ever such wire and cable industry deal—quickly circulated on the opening day of wire Düsseldorf in Germany, where some attendees were utterly stunned by the unexpected report.
A press release said that the addition of Encore Wire’s huge vertically integrated, single-site campus in McKinney, Texas, that produces a broad range of copper and aluminum electrical wire and cables, is highly complementary to Prysmian’s strategy. It “will allow Prysmian to increase its exposure to secular growth drivers, enhance its exposure to North America, leverage Encore Wire’s operational efficiency and best in class service across Prysmian’s portfolio, broaden Prysmian’s product offering enabling the combined company to better address customers’ needs in North America and generate ~€140m in run-rate EBITDA synergies expected within four years from closing.”
Massimo Battaini, Prysmian designated Group CEO, described the deal as a landmark moment. “Through this acquisition, Prysmian will grow its North American presence, enhancing its portfolio and geographic mix, while significantly increasing the exposure to secular growth drivers. We look forward to welcoming the Encore Wire team to Prysmian and benefitting from the combined company’s enhanced product offerings and customer relationships.”
“We are pleased to have reached an agreement that reflects the remarkable value Encore Wire has created with our expansive single-campus model, low-cost production, centralized distribution and product innovation,” said Daniel L. Jones, Encore Wire’s chairman, president and CEO. “Encore Wire and Prysmian are two highly complementary organizations, and we anticipate a bright future for Encore Wire as part of Prysmian. ... As part of a larger, global operation, we expect this transaction will bring additional future opportunities for our employees, whose dedication and hard work made this transaction possible. We look forward to working with Prysmian to complete this value-enhancing combination and realize the significant benefits that we expect it will bring to all of our stakeholders.”
The transaction, which was unanimously approved by each company’s Board of Directors and recommended to its shareholders by Encore Wire’s Board of Directors, is expected to close in the second half of 2024. The sale is subject to the approval of Encore Wire’s shareholders, regulatory approvals and other customary conditions.
At wire Düsseldorf, some attendees questioned the fit between the two entities, each of which is very successful, yet having different business approaches. Of note, Prysmian—founded in 2005 through the acquisition of the energy and telecom cables and system activities of Pirelli—does have a track record of making periodic major acquisitions. That includes the 2011 purchase of Draka Holding for €840 million and the 2017 purchase of General Cable for approximately $3 billion.
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