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Cable Technology Feature Article

November 23, 2010

Prysmian Soon to Launch Recommended Public Offer for Draka

By Jai C.S., TMCnet Contributor

Prysmian, a provider of high-technology cables and systems for energy and telecommunications, unveiled its plan to launch recommended public offer for Draka, to create a global leading player in the energy and telecom cable industry.

The combined group, as stated, is expected be a new leading player in the worldwide energy and telecom cable and systems industry, in particular in several of its high-technology segments. This transaction is believed to pave way for a better manufacturing footprint which will also allow improving service level and product offering in the Trade & Installers market segment.

Also, the combined group is planning to have operations in more than 50 countries, with a manufacturing footprint of over 90 plants, and a total workforce of more than 20,000 employees. The geographic presence as well as the industry portfolio is believed to be complementary and well balanced. The combination is expected to exploit Draka’s strength in Northern Europe and Prysmian‘s strong position in Southern Europe.

Both the companies believe that this combination can capture the significant growth opportunities available in the market through its leadership positions in key areas and segments and to deliver substantial benefits from sharing best practices and processes. Prysmian and Draka each claim to have an impressive track record in implementing cost savings and efficiencies and have identified significant scope for further improvements.

The combined group is expected to generate annual run-rate pre-tax synergies within three years primarily from the optimization of the manufacturing footprint, procurement of raw materials, overhead savings and implementing operating efficiency improvements.

In addition to the cost savings, the combination expects to generate additional synergy upside through sharing of best practices, introduction of proven concepts and procedures into the respective client bases and across each other’s footprint.

The transaction is expected to be earnings accretive from 2011 onwards, excluding one-off charges.

Draka is the holding company of a number of operating companies that are active worldwide in the development, production and sale of cable and cable systems. Draka's activities are divided into three groups: Energy & Infrastructure, Industry & Specialty, and Communications. Within these three groups, the activities are organized into divisions. Energy & Infrastructure consists of the Europe and Asia-Pacific divisions; Industry & Specialty consists of the Automotive & Aviation, Elevator Products, Cableteq USA, Industrial and Offshore divisions and the Communications Group comprises the Telecom Solutions, Multimedia and Specials, Americas and Optical Fiber divisions.

Draka has 68 operating companies in 31 countries throughout Europe, North and South America, Asia and Australia.