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General Cable Corporation (NYSE: BGC) (the Company) announced today that it has agreed to acquire Alcan Cable, the wire and cable business of Rio Tinto plc (Rio Tinto) (LSE: RIO). The purchase price is $185 million in cash, subject to customary adjustments primarily related to working capital levels at closing as provided in the definitive purchase agreement. The Company expects to use its Asset Based Revolving Credit Facility to principally fund the transaction. The transaction is expected to close in the second half of 2012, subject to receipt of regulatory approval.
Alcan Cable employs approximately 1,050 associates in its aluminum cable manufacturing and distribution facilities servicing the energy and construction markets in the United States, Canada, Mexico, and China. In 2011, Alcan Cable reported operating margins in the low single digit range. On an annual basis, the Company estimates the acquisition will contribute approximately $650-700 million in revenues at current metal prices. Over a cycle, Alcan Cable’s operating margin profile is expected to be consistent with the Company’s existing North American businesses as manufacturing, logistics, and purchasing synergies are realized. With these synergies, an improving North American market and an accelerating greenfield operation in China, the transaction is expected to create shareholder value in the near term.
“I have long admired Alcan Cable and their singular and long standing focus on being superb at their craft. 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. 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,” said Gregory B. Kenny, President and Chief Executive Officer of General Cable.
Gregory J. Lampert, President and Chief Executive Officer, General Cable North America, noted that, “The addition of aluminum construction cables further expands the range of products we offer to distributors serving electrical and industrial contractors and increases our capacity to efficiently serve our electric utility customers with transmission and distribution products.”