Prysmian sets off expansion in Russia by acquiring Rybinsk Electrocabel
News Release from:
Prysmian Cables and Systems
16 December 2009
Prysmian sets off its first move in the expansion strategy in the Russian market by closing the acquisition of Rybinsk Electrocabel, one of the most dynamic Russian cable manufacturers.
“The deal is just the first step of a broader expansion project of our Group in the Russian market – explains Valerio Battista, Prysmian’s Managing Director -. Rybinsk’s assets represent an ideal platform from which we intend to develop further investments, with the objective of building local production capacity in high technology business areas such as High Voltage and Industrial cables. Our aim is to triple the turnover currently achieved in Russia in the next three years.”
Prysmian has acquired 100% of Rybinsk Electrocabel. The €11 million enterprise value account for approximately €2 million equity value and approximately €9 million Net Financial Position. In 2008 Rybinsk reported a turnover of approximately €36 million with a production unit located 350 km NE of Moscow, where 360 people are employed. Upon conclusion of Rybinsk Electrocabel’s assets acquisition, the second step of Prysmian’s plan in Russia includes the building of a new manufacturing unit dedicated to High Voltage cables. Currently, Prysmian serves the Russian High Voltage market by importing cables from other Group’s European factories.
The start up of the local production will represent for Prysmian an undoubted competitive advantage factor and will promote the strengthening of the Group’s presence in a market with a strong potential. Utilities and operators, involved in the upgrade and in the development of the power transmission grids, have planned investments with a value in excess of €10 billion.
After a downturn phase between 2008 and 2009 due to global crisis, the Russian cable market is expected to recover achieving a value of around €2 billion in the next three years, with a higher growth rate in the High Voltage market (source: Electrocable Association Russia). Among several projects in which Prysmian is already involved, the development of a High Voltage network in Saint Petersburg, while in 2007/2008 the Group collaborated with the upgrading of the Moscow transmission grid.
The investment in Russia follows other significant development projects undertaken by the Group in businesses with a high growth potential: the new High Voltage facility in North America, the production capacity increase in the High Voltage factory in China and other minor investments still in the cable market’s most strategic sectors.