Italian co to acquire 60% in Nicco unit
Italy’s Prysmian Group is poised to fork out a minimum of Rs 130 crore to acquire a majority 60% stake in Kolkata-based Nicco Corporation’s industrial cables business.
Nicco will spin off its cables business into a distinct JV company, christened Nicco Cables, in which Prysmian Cable Moulding, Netherlands will hold 60% while the balance 40% stake will be held by Nicco.
Nicco has just inked a JV agreement with Prysmian Cable Molding. “The entire cables business of Nicco will be transferred into the new company in which Prysmian will have a 60% shareholding,” Nicco chairman Rajive Kaul told ET on Tuesday. Nicco is likely to receive a consideration of Rs 130 crore for transfer of its cables division.
According to the contractual arrangement, the Nicco Cables board will consist of five directors, three of them including the managing director will be appointed by Prysmian and other two, including the chairman, will be appointed by Nicco. Rajive Kaul will be chairman of the new company, while Prysmian will be responsible for managing the JV’s operations.
The development marks the entry of the Prysmian group into the growing Indian market for industrial cables. A top MNC player with 5 billion Euro in sales in 2006, has 54 manufacturing units located across 21 countries. Controlled by Goldman Sachs, Prysmian is a world leader in energy and telecommunication cables with strong technology and market position in value-added segments.
In case you didn’t know it, Prysmian’s roots go back to the history of Italy’s iconic Pirelli group. In 2000-01, Pirelli acquired the power cables business of Germany’s Siemens, and subsequently underwent a radical restructuring process before the Goldman Sachs Group acquired Pirelli’s energy and telecom cables business to form Prysmian Cables in 2005.
Nicco, which is also one of the oldest cable brands in India, operates in the high end market. It has two units in Shyamnagar and Baripada, where it makes speciality and power cables. With the closure of Incab Industries, Nicco has been able to further consolidate its market share in recent years. Last year, Nicco’s cable business generated revenues of Rs 400 crore. “The details of the new company including the equity base will be finalised shortly,” Mr Kaul added.
“The JV will gain from Prysmian’s technology and knowhow and Nicco’s deep knowledge of the Indian market,” Mr Kaul added. The two companies had earlier announced the signing of a term sheet with Prysmian on July 30, 2007. Nicco informed BSE that the company has entered into definitive agreements with Prysmian, late on Monday night.
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