General Cable Corp., Highland Heights, Ky., has agreed to acquire the global wire and cable business of Freeport-McMoRan Copper & Gold Inc., which operates as Phelps Dodge International Corp. (PDIC).
The acquisition comes just months after Freeport-McMoRan bought Phelps Dodge Corp. The purchase price is approximately $735 million.
The wire and cable business operates factories and distribution centers in 19 countries throughout Latin America, Asia and Africa. It also has equity positions in wire and cable companies in China, Hong Kong, and the Philippines, General Cable said. For the year ended Dec. 31, 2006, PDIC reported revenues of approximately $1.2 billion.
General Cable said Phelps Dodge International Corp. has little geographic overlap with General Cable. Sales are primarily focused on energy products for utility, industrial and construction applications. Additionally, PDIC has copper and aluminum rod mills on three continents, a source of competitive advantage in developing regions.
Just over half of PDIC's revenues are generated from manufacturing assets located in South and Central America, where it has leading market positions and where General Cable has a minor presence. PDIC also brings over $200 million of revenues in sub-Saharan Africa, where General Cable participates on a much smaller scale. PDIC is a leader in Southeast Asia and India with positions that nicely complement General Cable's current activities in India, China and Oceania. PDIC has equity investments in two companies serving the Chinese energy cable market as well as one in the Philippines.
Based on reported 2006 sales of $4.8 billion, the combined companies would have approximately 44 percent of revenues in North America; 27 percent in Europe and the Middle East; 15 percent in South and Central America; and 14 percent in Africa/Asia Pacific, General Cable said.
“The acquisition of PDIC is truly a unique opportunity, greatly accelerating our initiative to expand into many of the faster growing emerging economies of the world,” said Gregory B. Kenny, president and chief executive officer of General Cable.