US-based wire and cable firm General Cable Corp has sold its majority holdings in Phelps Dodge International Philippines Inc (PDP) to its local joint venture partner A Soriano Corporation (Anscor), for a cash consideration of $67.1 million (P3 billion), the company said.
The deal also involves General Cable Corp selling its 0.2 per cent stake in Phelps Dodge Philippines Energy Products Corporation (PDEP) to Anscor.
Anscor, which currently owns 40 per cent in PDP, will fully own the company post the deal, as it will buy out the 60 per cent share, held by its US-based partner, it said in a separate disclosure to the Manila Exchange.
Phelps Dodge was born in 1955 when Anscor forged a partnership with Phelps Dodge International Corporation (PDIC). In 2007, PDIC became part of General Cable Corporation, forming an alliance that is now the second-largest wire and cable group in the world.
Phelps Dodge, the largest manufacturer of building wires, power cables, communication cables, special cables and other aluminium products in the Philippines, is also a global leader in this space. The company has a worldwide network that develops, designs, manufactures, markets and distributes copper and aluminium cables and wires for the retail, commercial, institutional, energy, industrial, specialty and communication markets.
General Cable’s exit from PDP is part of the company’s strategy to divest all its manufacturing operations in Asia Pacific and Africa, in order to simplify its geographic portfolio and reduce organisation complexity.
General Cable’s chairman of the board John Welsh III said their company was focused on its restructuring program and delivering improved returns from core strategic markets.
“We are pleased with the efficient and timely execution of this meaningful transaction, which represents a significant initial step in simplifying our portfolio. Our team has effectively completed this sale while continuing to advance our divestiture plans for the remaining assets within Asia Pacific and Africa. We continue to believe these actions will enable us to optimize our asset base and sharpen our strategic focus on our core assets in North America, Latin America and Europe,” Welsh added.
“Proceeds from the sale will be used to reduce outstanding borrowings on the company’s North American and European asset based revolving credit facility,” General Cable said in a statement.
A Philippine holding company that began operations in 1930, Anscor is invested in various industries and businesses such as mining, fertilizer manufacturing, financial services sectors, including export of services and information technology.
According to the recent BCC Research report, the global cable market was valued at $172 billion in 2012 and $188.3 billion in 2013. This market is expected to reach $205 billion in 2014 and $297.4 billion in 2019, a compound annual growth rate (CAGR) of 7.7 per cent from 2014 to 2019.
The study likewise indicated that market for power cables is expected to increase from nearly $153.2 billion in 2014 to about $219.7 billion by 2019, with a CAGR of 7.5 per cent from 2014 to 2019.
Telecom cables are expected to increase from $51.8 billion in 2014 to about $77.8 billion by 2019, with a 2014-2019 CAGR of 8.5 per cent, the BCC Research report said.