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General Cable Corp. (NYSE: BGC), Highland Heights, KY, has agreed to acquire Alcan Cable, the wire and cable business of Rio Tinto plc (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.
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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, General Cable 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.
"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," said Gregory J. Lampert, president and CEO, General Cable North America.