Fiber-optic cable powerhouses merger would create notional annual sales worth €11 billion.

The deal will include General Cable’s debt and some other liabilities, and overall represents a premium of approximately 81% to the company’s closing price of $16.55 per share in July, 2017, when it announced its review of strategic alternatives.

“The acquisition of General Cable represents a landmark moment for Prysmian Group and an opportunity to create value for our shareholders and customers,” said Valerio Battista, Prysmian Group CEO. “Through the combination of two of the premier companies in the cable industry we will enhance our position in the sector, by increasing our presence in North America, Europe and South America.”

John Welsh, III, Non-Executive Chairman of the Board of General Cable, commented, “This announcement is the culmination of a review of strategic alternatives undertaken by the General Cable Board of Directors. We are confident that this transaction maximizes value for our shareholders.”

Michael McDonnell, General Cable President and CEO, 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.”

The transaction, which has been approved by each company’s Board of Directors and recommended to its shareholders by General Cable, 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, and other customary conditions.

‘Joint sales of €11 billion’

based on pro forma aggregated results for the twelve months ended September 30, 2017, the combined group would have had sales of over €11 billion and adjusted EBITDA of approximately €930 million. 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 €150 million within five years following closing mainly from procurement, overhead costs savings and manufacturing footprint optimization. One-off integration costs are estimated at approximately €220 million.

The transaction will be financed through a mix of new debt (for which Prysmian has already received lender commitments), 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 adj. EBITDA LTM 3Q-2017 PF.