Chilean copper products manufacturer Madeco (NYSE: MAD) has agreed to sell its cable business to French cable producer Nexans for US$448mn cash and 2.5mn shares in the European company, Madeco reported in a statement. After having signed a framework agreement on the deal, the companies will carry out due diligence and expect to ink a final contract by January 24, according to Madeco.
The deal would make Madeco Nexans’ main shareholder with an 8.9% stake. The transaction is still subject to a shareholder vote in both companies and regulatory approval. The deal is valued at roughly US$800mn based on Nexans’ trading price Thursday in Paris of 96.81 euros, down nearly 5% compared to Wednesday (Nov 14). Madeco shares were trading at US$13.89 in New York, down 1.68% from the opening price.
Nexans, already the world’s largest cable producer, aims to expand in South America with the purchase and especially in Brazil, where it already has operations, company COO Frédéric Vincent said in a conference call Thursday. The company’s strategy has a central focus of becoming “the world’s undisputed leader in energy cables,” Vincent said.
In 3Q07 Madeco made 161bn pesos (US$317mn) in revenues, out of which 103bn pesos came from cable sales to Chile, Argentina, Brazil, Peru and Colombia. The company also produces copper tubes and sheets, aluminum profiles and flexible packaging but cables are Madeco’s most important business in revenue terms.
