Southwire bid to buy CCI for $786 million would make it world's 3rd largest cable company
Southwire Company announced that it has entered into a merger agreement to acquire Coleman Cable Inc. (CCI) in a transaction valued at approximately $786 million, including the assumption of $294 million in net debt.
Based on revenue numbers, the deal should see Southwire rise from the fifth to the third largest cable company in the world. The deal, unanimously approved by the Coleman board of directors, is expected to close in the first quarter of 2014.
CCI manufactures a wide range of cable products for consumer, commercial and industrial applications in three segments: distribution, OEM and engineered solutions. It has multiple brand names, many of which were the result of acquisitions over the years. One key acquisition was that of Copperfield in 2009, with more recent such deals including the acquisition of First Capitol Wire & Cable and Continental Wire & Cable in 2011. CCI, which has 1,700 employees, had 2012 revenues of $914 million.
Officials from Southwire, which has some 5,500 employees, welcomed the CII addition, which will bolster its product scope. "The combination of Southwire and Coleman will create one of the wire and cable industry's preeminent companies with the ability to provide world-class service to its customers through a more robust and higher-quality offering of products and services, operational excellence and a stronger platform for enhanced product innovation," said Southwire President and CEO Stuart Thorn. "Coleman's exceptional engineering capabilities across multiple end markets and stellar reputation among customers make it an ideal fit with Southwire. Our shared focus on technology and innovation will allow us to better serve our respective customers, while also saving them time and money. Southwire's outstanding team of motivated, loyal and experienced people is one of our greatest strengths, and we look forward to welcoming the talented and dedicated Coleman team to the Southwire family, where together we will achieve new levels of growth, innovation and service."
"We are pleased to announce this transaction, which delivers immediate and certain cash value to our stockholders and supports a strong future for Coleman," said Coleman Cable President and CEO Gary Yetman. "By partnering with Southwire, Coleman will benefit from Southwire's extraordinary track record of operational success as we continue to execute on our mission of expanding product offerings and sales and exceeding the expectations of our diverse and growing customer base. As one of North America's largest producers of wire and cable, Southwire is a proven industry leader and together we will continue building on the solid momentum our team worked so hard to create."
Until the merger is complete, both Southwire and Coleman will continue to operate as separate companies, a press release said. "Following the transaction's closing, Coleman's management team will join the Southwire organization, and Southwire expects to maintain a significant presence in Waukegan."
Southwire agreed to pay $26.25 per share in cash. Following successful completion of the tender offer, Southwire will acquire all remaining shares not tendered in the offer through a second step merger at the same price as in the tender offer, the release said.
In a sign of the times, less than one and a half hours after the deal was announced at 9 am on Friday, Dec. 20, a law firm announced that it would be "investigating" to see if CCI's board of directors had sold the business for less than it was worth. By day's end, seven more law firms had issued similar announcements. Of note, CCI's stock had sold for under $10 a share on Jan. 1.