wiredinUSA September 2013

INDEX

Expocenter fairground - Moscow

$822m cable buy-out

Madeco, Chile’s biggest maker of copper wire, increased 25 percent in Santiago. Madeco’s cable unit, which represents about 65 percent of the parent company’s sales, generated earnings before interest, taxes, depreciation and amortization equal to 10.6 percent of revenue, compared with a margin of 6 percent at Nexans. The higher margins can be explained by strong demand and fewer competitors, said Nexans chief executive, Gerard Hauser. Hauser added that Nexans will now target North America and Asia, notably Japan and China, where it is studying two purchases. The company may look at acquisitions “of significant size”.

Nexans SA has agreed to pay $822 million for Madeco SA’s cable business. Madeco will receive a 9 percent stake in the company. Nexans, which purchased Olex Cables in 2006, has doubled its Asia-Pacific revenue with boosted sales of higher-margin high-voltage cables as power producers in the area seek to meet increasing electricity demand. “The deal fills a hole, as Nexans lacked a significant presence in fast-growing Latin America,” said Kepler analyst Pierre Boucheny. “But the transaction isn’t cheap. Nexans is betting it can improve Madeco’s profitability.” Nexans shares fell 4.8 percent, but the stock has changed very little during 2013 compared with its closest competitor, Prysmian SpA, whose shares have gained 25 percent since its initial share sale in May.

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wiredInUSA - September 2013

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