Mattr Corp's Strategic Acquisition of AmerCable Enhances Growth

Mattr Corp Expands Capabilities with AmerCable Acquisition

In a significant move to bolster its engineering and manufacturing capabilities, Mattr Corp. has announced a definitive agreement to acquire AmerCable Incorporated for a purchase price of US$280 million. This acquisition is set to enhance Mattr's presence in the U.S. market, aligning with the global trend towards electrification.

Transaction Details and Implications

This acquisition involves the purchase of all outstanding shares of AmerCable from Nexans USA Inc. The deal, valued at approximately C$390 million, signifies a multiple of around 5.0 times AmerCable's Adjusted EBITDA, based on the business’s earnings over the trailing twelve months. The completion of this transaction is contingent upon customary conditions, including U.S. anti-trust review.

Benefits of the Acquisition

Strengthening Mattr's Market Position

According to Mike Reeves, President and CEO of Mattr, this acquisition represents a crucial step in enhancing Mattr’s wire and cable business within the expansive U.S. market. The deal not only enriches Mattr’s existing portfolio by adding medium voltage solutions but also expands manufacturing capabilities in North America. This move is expected to enable Mattr to better serve customers in both Canada and the U.S.

Growth Potential

Tom Holloway, Mattr’s CFO, anticipates that the addition of AmerCable will create long-term value for shareholders and will be immediately accretive to Mattr’s earnings per share, exclusive of expected synergies. This opportunity comes at a compelling valuation, aligning well with Mattr's strategic growth objectives.

Strategic Rationale Behind the Acquisition

• Complementary Core Competencies: AmerCable’s focus on bespoke, lower volume, high-margin solutions mirrors Mattr's Shawflex brand approach, allowing both companies to leverage their innovative capabilities.
• Enhanced Geographic Presence: Through this acquisition, Mattr will gain robust production capabilities and commercial networks in the U.S., broadening access to electrification markets.
• Broadened Product Offering: With AmerCable’s unique medium voltage capabilities, Mattr can now offer critical electrification solutions across a wider range of applications in North America.
• Increased End-Market Access: AmerCable brings additional material technologies and certifications that will diversify Mattr’s market exposure and improve raw material efficiency.
• Cross-Selling Opportunities: The integration is expected to foster innovation and provide comprehensive solutions to customers in both companies.
• Future Growth Platform: The merger creates a strategic network of manufacturing facilities from Canada down to Texas, establishing a platform for further organic growth.

Financial Highlights and Future Outlook

• Valuation and Financial Performance: The acquisition price reflects a compelling valuation, expected to enhance Mattr’s margin profile and contribute significantly to revenue.
• Strengthened Financial Profile: AmerCable’s strong earnings visibility and established relationships with top clients enhance Mattr’s overall financial stability.
• Acquisition Accretion: The deal is anticipated to be highly accretive to Mattr's EPS, further boosting their financial prospects.

Mattr plans to finance the acquisition through a combination of cash reserves and existing credit facilities, allowing the company to maintain a sound balance sheet and pursue its growth initiatives, including share buybacks under its existing program.

Expert Insights and Future Direction

With unanimous approval from both companies' Boards of Directors, Mattr anticipates finalizing the acquisition by the end of the year, pending regulatory reviews. The organization is excited about the strategic fit and the potential to significantly enhance both revenue and operational capabilities.

Mattr’s commitment to growth and innovation positions it favorably in the face of increasing demand for specialized wire and cable solutions, particularly as infrastructure modernization continues across North America.

Frequently Asked Questions

What is the significance of Mattr acquiring AmerCable?

The acquisition enhances Mattr's manufacturing capabilities and expands its presence in the U.S. market, aligning with the ongoing electrification trend.

How will this acquisition impact Mattr’s financial performance?

Mattr expects the deal to be immediately accretive to earnings, supporting long-term value creation for shareholders.

What new capabilities does AmerCable bring to Mattr?

AmerCable adds medium voltage cable solutions and enhances Mattr’s existing low voltage offerings, providing a comprehensive product portfolio.

When is the expected closing date for the acquisition?

The transaction is anticipated to close by the end of the year, subject to regulatory approvals.

Who are the financial advisors for this transaction?

TD Securities Inc. and Dentons LLP are serving as the exclusive financial and legal advisors to Mattr for this acquisition.

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