Recently, General Cable Corporation entered into an agreement to acquire majority stake in Procables S.A (Procables), a privately owned manufacturer of a broad range of wire and cable products. The company will acquire 60% share in Procables for $45 million and the remaining 40% share will be held by the Sredni Group. The transaction is subjected to regulatory approval, with closure expected in the second half of 2012.
Procables has two manufacturing facilities, one in Bagota and the other one in Barranquilla. The products manufactured include low and medium voltage power cables, building wire, industrial, communications and bare aluminum conductors as well as operating copper and aluminum rod mills. Procables generated revenue of $120 million in 2011.
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. This acquisition complements the company's existing product portfolio and is expected to be accretive in the first full year of operation.
General Cable will benefit from the strong regional commercial strategy and extensive distribution network of Procables. This, combined with the technical and operational expertise of General Cable, will help it to expand its product portfolio and the value proposition to the Andean Region customers.
This is the second acquisition by the company during 2012. Earlier, General Cable announced the acquisition of Alcan Cable, the wire and cable business of Rio Tinto plc (RIO - Free Report) . The acquisition will be made at $185 million in cash. Alcan Cable serves the energy and construction markets in the United States, Canada, Mexico and China. It employs approximately 1,050 associates in its aluminum cable manufacturing and distribution facilities.
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 recommendation).