Nexans to acquire Olex, the cable industry leader in Australasia
This acquisition, the largest yet made by Nexans, will reinforce its leading position in its core business and double its presence in the Asia-Pacific area
Paris, November 8, 2006 – Nexans, the worldwide leader in the cable industry, announced the signature of an agreement to acquire the Australian company Olex, the uncontested cable industry leader in the Australasia region, for a $515 million (approximately 310 million euros).
Olex employs 910 people with annual revenue of 330 million euros at current metal price (240 million euros using Nexans'constant metal rate*) in 2006 and an EBITDA ratio at constant metal price of more than 15% (fiscal year ended at June 30, 2006). Olex has three manufacturing sites based in Tottenham and Lilydale in Australia, and in New Plymouth in New Zealand, and a dozen sales offices in Australia, New Zealand, Singapore and China. The company's activities are divided between markets for cables for power network infrastructure (33%), specialty cables for industry such as mining (24%), and cables for the building sector, both energy and telecom (43%).
"This acquisition is in line with our strategy to expand in the Asia-Pacific area, a fast-growing area, and strengthens the geographical rebalancing of our Group. The percentage of Nexans' sales made in this area will almost double from 6% to 11%", said Gérard Hauser, Nexans' Chairman and CEO. "This acquisition also reinforces Nexans' core energy sector business, particularly in high-voltage and special cables for industry, thanks to Olex's broad product range. Olex, whose brand name and reputation are well-known, has a strong management team and 3 advanced production sites. Finally, this acquisition will offer us synergies, mainly commercial, in particular through the pooling of Nexans sales teams in the world and Olex ones in the Asia-Pacific area", he added.
The investment of approximately 310 million euros (that is to say 7 times expected 2007 EBITDA before synergies) will be entirely financed from Nexans' existing credit lines. It will have an accretive impact as from the first fiscal year. This acquisition will generate balance sheet goodwill of approximately185 million euros and result in the Group's gearing reaching at the end of December 2006 about 47%.
This transaction is subject to the approval of the Australian authorities. The closing is expected by the beginning of December.
NB: reconciliation between Olex financial data and accounting policies of Nexans Group are currently being finalized.
*In accordance with the method used by Nexans for neutralising the effect on sales of variations in the price of non-ferrous metals.
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Olex is an Australian manufacturer of electrical cables with more than 65 years of experience servicing the Australian and Asia Pacific energy, construction and industrial markets. As Australia’s largest power cable manufacturer, Olex is a well respected supplier, providing a full range of general purpose fixed and flexible cables as well as special purpose cables. Olex also provides specialist technical services, cable design and other value added services gained from our extensive experience in the cable industry. Olex employs around 900 staff in Australia and New Zealand, with sales offices and distribution centres throughout the Asia-Pacific Area. The main manufacturing and product development centre is at Tottenham in Victoria, Australia. This is also the Olex Holdings Corporate head office. In total, there are three Olex manufacturing facilities – Tottenham, Lilydale (Victoria) and New Plymouth (NZ), and all are quality certified to ISO 9001.