Prysmian Group (BIT: PRY) has announced a definitive agreement to acquire Encore Wire Corporation (NASDAQ: WIRE), a leading North American manufacturer of electrical wire and cable, for $290.00 per share in cash.

This transaction marks a strategic expansion for Prysmian Group, with the purchase price representing a 20% premium over the 30-day volume-weighted average share price and a 29% premium over the 90-day average, as of April 12, 2024.

The acquisition, valued at an implied enterprise value of approximately €3.9 billion, is a testament to Prysmian’s commitment to growth and innovation. The deal multiples stand at 8.2x EV/2023A EBITDA and 6.3x EV/2023A EBITDA when accounting for run rate synergies.

“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 Chief Executive Officer.

“This transaction maximizes value for Encore Wire shareholders and provides an attractive premium for their shares. Encore Wire and Prysmian are two highly complementary organizations, and we anticipate a bright future for Encore Wire as part of Prysmian.

Furthermore, 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.”

Post-transaction, Prysmian plans to maintain a significant presence at Encore Wire’s state-of-the-art, single-site campus in McKinney, Texas. This merger is poised to enhance Prysmian’s presence in North America, tapping into secular growth drivers and leveraging Encore Wire’s operational efficiency. The combined entity is expected to generate approximately €140 million in run-rate EBITDA synergies within four years of closing.

With pro forma aggregated results for the twelve months ending December 2023, the merged group would have reported net sales exceeding €17.7 billion and an adjusted EBITDA of around €2.1 billion.

The financing structure for this deal includes a mix of €1.1 billion in cash from Prysmian’s balance sheet and €3.4 billion in newly committed debt facilities.

Prysmian Group, a global leader in the energy transition and digital transformation, is strategically positioned to capitalize on market trends with its extensive product range and technological prowess. With nearly 150 years of experience, the company boasts a strong global presence, including 108 plants and 26 R&D centers across over 50 countries, and reported sales of over €15 billion in 2023.

Encore Wire, renowned for its comprehensive range of copper and aluminum electrical wire and cables, is committed to powering the future with its cost-effective production and exceptional customer service. The company’s products are proudly manufactured in the United States at its vertically integrated campus in Texas.

“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,” said Massimo Battaini, Prysmian designated Group CEO.

“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.”

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