General Cable Corporation
) intends to acquire Alcan Cable, the wire and cable business of
Rio Tinto plc
). The acquisition will be made at $185 million in cash, subject to
normal adjustments, mainly relating to working capital levels at
the time of closure.
General Cable expects to finance the transaction through its
Asset Based Revolving Credit Facility. Subjected to regulatory
clearances, the acquisition is expected to close in the second half
Alcan Cable serves the energy and construction markets in the
United States, Canada, Mexico and China though approximately 1,050
associates employed in its aluminum cable manufacturing and
distribution facilities. Alan Cable's operating margin was in the
low single digits in 2011. Further, annual revenue contribution
from the acquisition is expected to be approximately $650-700
million at current metal prices.
Over the past 100 years, Alcan Cable has been working in its
sector, enjoying an outstanding position and renowned for its
commitment to its work. Alan's brands, STABILOY and NUAL, are well
known for their standard quality, packaging and service in the
North American aluminum cable industry. Addition of a company like
Alan Cable is strategically sound for General Cable.
General Cable is engaged in the development, design,
manufacture, marketing, and distribution of copper, aluminum and
fiber optic wire and cable products for the energy, industrial,
specialty and communications markets. The company will be able to
expand its presence in these markets with the addition of Alan
Primary demand for General Cable's products comes from North
America. During the first-quarter 2012, sales volume in North
America, measured in terms of metal pounds sold, increased 7% year
over year. The combination of Alcan's expertise provides
manufacturing, logistics, and purchasing synergy to the company's
North American businesses.
Further, greenfield operation in China is expanding, and Alcan's
presence in these markets provides additional opportunity. The deal
is expected to create shareholder value in the near term.
General Cable Corporation holds a Zacks #3 Rank (short-term Hold
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