Prysmian set to acquire electrical wire and cables firm Encore Wire for $3.9bn

Prysmian has announced a definitive merger agreement to acquire Encore Wire Corporation for $290.00 per share in cash. This transaction marks a 20% premium over the 30-day volume-weighted average share price as of April 12, 2024, valuing Encore Wire at approximately €3.9 billion. This price reflects a multiple of 8.2x based on 2023A EBITDA and 6.3x including synergies. The acquisition is set to significantly expand Prysmian’s presence in North America, capitalizing on the growing demand for sustainable and reliable energy infrastructure solutions.

The merger is a strategic move for Prysmian, enhancing its exposure to North American markets and complementary products from Encore Wire, a leading manufacturer of copper and aluminum electrical wire and cables. This acquisition is expected to generate approximately €140 million in EBITDA synergies within four years post-closing, demonstrating Prysmian’s commitment to operational efficiency and market expansion.

Massimo Battaini, the designated Group CEO of Prysmian, expressed enthusiasm about the acquisition: “The acquisition of Encore Wire represents a landmark moment for Prysmian and a strategic and unique opportunity to create value for our shareholders and customers.” Daniel L. Jones, Chairman, President, and CEO of Encore Wire, also highlighted the benefits, stating, “This transaction maximizes value for Encore Wire shareholders and provides an attractive premium for their shares.”

Upon completion, the combined entity is projected to have net sales exceeding €17.7 billion and an adjusted EBITDA of around €2.1 billion. The financing of the deal will involve a combination of cash from Prysmian’s balance sheet and newly committed debt facilities. This strategic financial structuring is anticipated to accelerate deleveraging, aligning the leverage ratio close to Prysmian’s standalone 2023 figures by 2027.

The transaction has received unanimous approval from the boards of both companies and is recommended to Encore Wire’s shareholders. It is anticipated to close in the second half of 2024, pending regulatory approvals and other customary closing conditions.

The merger between Prysmian and Encore Wire is a significant step in the industry, poised to reshape the landscape of electrical infrastructure development in North America. The strategic alignment and financial benefits suggest a robust future for the combined entity, with enhanced capabilities to meet the evolving demands of the energy sector.