Prysmian-Encore Wire: Wire transfer

The fourth Industrial Revolution has produced a host of household names, from Intel to Siemens, but every bit as important to making the modern world go round as microchip manufacturers or transport industrialists are those companies providing the proverbial connective-tissue of today’s economy ─ wiring and cabling specialists.

With turnover of over €15 billion in 2023, Prysmian is the world’s number one wire and cable manufacturer, and in April it flashed the cash to the tune of $4.2 billion to bring Encore Wire into its family of firms.   

Founded in McKinney, Texas in 1989, Encore Wire is a major supplier of copper and aluminum electric cabling and wiring to products to residential, commercial and industrial clients. Prysmian acquired Encore Wire in an all-cash deal that valued the company at $290 per share.

From a strictly financial point of view the deal makes sense, with the latter posting revenue of $2.6 billion for the 2023 tax year. The market seemed to agree, with Prysmian’s share price increasing from €35 at the end of November 2023 to €62 at the end of November 2024.

Last July, The European Investment Bank and Prysmian signed a €450 million finance contract to facilitate electricity transmission and distribution in Europe

Prysmian’s CEO, Massimo Battaini, had this to say of the deal, “Through this acquisition, Prysmian will grow its North American presence, enhancing its portfolio and geographic mix, while significantly increasing the exposure to secular growth drivers.”

Stressing that Encore Wire and Prysmian are “highly complementary organizations,” Battaini’s counterpart on the other side of the Atlantic, Daniel L. Jones, added that the deal reflected “the remarkable value Encore Wire has created with [its] expansive single-campus model, low-cost production, centralized distribution and product innovation.”  

Prysmian’s cables are seen as the gold-standard for everything from elevators to alarm systems to telephone lines. It provides 97% of all transmission cables in the United States. Its North American operations include 38 locations and nearly 8,000 associates.  

Strategic rationale
Prysmian enjoys a privileged position for a non-US firm as a long-standing supplier to the US military, although one-third of institutional investors are from the United States. The fact that it has further embedded itself in the fabric of the US economy with this takeover is a smart move, given that national security aspects of energy and telecom cables have grown in importance to governments on both sides of the Atlantic in recent years.

At the 79th annual UN General Assembly in September 18 nations, including the US, Australia, Canada, the EU, and several Pacific nations, endorsed a joint statement addressing the security and resilience of undersea cable infrastructure.

Last July, The European Investment Bank and Prysmian signed a €450 million finance contract to facilitate electricity transmission and distribution in Europe. Prysmian will use the EIB funds to build new production lines for extra-high-voltage submarine cables, lines for high-voltage onshore cables and other technical improvements to existing lines, doubling its production capacity for such cables at its factories in Finland, Italy and France to around 4,000km a year.

This is not the first time that Prysmian has acquired a leading company in the sector in the US. In 2017 it paid $3 billion for General Cable, the world’s 4th biggest cable and wire company at the time it was bought by Prysmian.