PARIS (Reuters) - Europe’s biggest cable maker Nexans (NEXS.PA) announced plans on Thursday to buy the cables business of Chilean copper cable and pipe manufacturer Madeco MAD.NMAD.SN in a cash and share deal worth $822 million.
The acquisition is the biggest by Nexans since it was spun out of Alcatel in 2001 and will make Madeco a 9 percent shareholder in the French company, which has been benefiting from global infrastructure growth and high metal prices.
Nexans will pay with 2.5 million newly issued Nexans shares and $422 million in cash and the assumption of debt after taking into account minority interests, it said.
At the Nexans share price of 101.67 euros on November 14, 2007, it will represent an enterprise value of $822 million and an acquisition goodwill of close to $380 million, it added.
Nexans shares fell up to 3.2 percent in light volume to 98.43 euros on the deal, which must be approved by shareholders and would result in a 10 percent dilution of its capital.
Chief Operating Officer Frederic Vincent said the deal would nonetheless boost earnings on a full-year basis from 2009, but declined to estimate synergies, saying it was too early.
Following a framework agreement on the deal, Nexans expects to complete the tie-up in the third quarter of 2008.
Nexans was one of the strongest performing French stocks last year, rising more than 140 percent. But the company has a hole in Latin American coverage that it is anxious to plug, Vincent said.
It will continue to seek other acquisitions, he added.
Nexans said it was particularly interested in Madeco’s position in energy cables in high-growth markets like Brazil.
Reporting by Tim Hepher; Editing by David Holmes