General Cable Corporation recently confirmed that it will acquire Alcan Cable, the wire and cable business of Rio Tinto plc (Rio Tinto). The acquisition price is expected to be in the range of $185 million and will be subject to customary adjustments that are mostly related to working capital levels at closing which is highlighted in the definitive purchase agreement.
“I have long admired Alcan Cable and their singular and long standing focus on being superb at their craft,” Gregory B. Kenny, president and chief executive officer of General Cable, said. “Alcan Cable’s STABILOY and NUAL brand names are the gold standard for quality, packaging, and service in the North American aluminum cable industry.”
“In addition, they are highly skilled in aluminum rod manufacturing and have built a state of the art facility in China that is successfully penetrating the domestic construction cable market,” he added. “Alcan Cable’s rich history, like General Cable’s, exceeds 100 years. We look forward to sharing best practices and creating fresh career opportunities for the very dedicated and professional Alcan Cable team”.
Alcan Cable employs close to 1,050 associates in its aluminum cable manufacturing and distribution facilities that support the energy and construction markets in the United States, Canada, Mexico, and China. General Cable Corporation will rely on its Asset Based Revolving Credit Facility to provide most of funds for the transaction. The transaction should be officially completed during the second half of 2012 and will be subject to receipt of regulatory approval.
Mathias F. Sandoval, president and chief executive officer of General Cable Rest of World, said, “Alcan Cable China has a 430,000 square foot, vertically integrated manufacturing plant in Tianjin, China and eight regional sales offices. Alcan Cable China is highly complementary to our two long standing partnerships in China representing a new route to market for our full range of products. The addition of Alcan Cable Mexico combined with our existing manufacturing capability in the country further enhances our ability to service the Mexican market.”
General Cable Corporation expects that the acquisition will provide close to $650-700 million in revenues based on current metal prices. Over a period of time, Alcan Cable’s operating margin profile is expected to be consistent with the General Cable Corporation existing North American businesses as manufacturing, logistics, and purchasing synergies are realized.
Edited by Carrie Schmelkin