In the midst of unprecedented increases in copper prices and continuing consolidation in the wire and cable market, Southwire Co., Carrollton, Ga., has agreed to buy the building wire and cable assets of Essex Electrical Products, Fort Wayne, Ind.
The deal, which includes the Essex plant in Florence, Ala., is contingent upon approval by Alpine Group’s shareholders and is expected to close near year-end. The Alpine Group Inc., is an East Rutherford, N.J., holding company that owns approximately 84 percent of Essex.
According to an Alpine Group release, the purchase price is the sum of $27 million plus the closing date value of Essex Electric’s inventory and certain prepaid assets. On Aug. 31, the value of Essex Electric’s inventory was approximately $43 million and outstanding accounts receivables were $64 million. On that date Essex Electric had approximately $27 million in liabilities and $44 million of revolving credit indebtedness.
Essex manufactures building wire used in residential, commercial and industrial construction. The company’s current product line includes non-metallic sheathed cable, underground feeder, as well as service entrance cable for the residential market, and a variety of thermoplastic and thermoset insulated copper wires for the commercial and industrial markets, according to its Web site.
The acquisition would add to Southwire’s growing stable of building wire and cable products. In the past several years, the company has made a number of significant investments, including its 2001 purchase of the building wire assets of General Cable, and its acquisition last year of Alflex Corp., Long Beach, Calif., and its line of metal-clad cable and flexible conduit products.
Jeffry Bleiman, principal of William. B. Bleiman and Sons, a Philadelphia-based manufacturers’ rep, has represented Essex Electrical Products for the last year, and is disappointed the company was sold. “They had been doing such a great job,” he said. “Their fill rates and people were terrific. It was a terrific marriage.”
With the Southwire acquisitions of the building wire operations of Essex and General Cable, the largest remaining independent players in building wire business include Encore Wire Corp., McKinney, Texas; Colonial Cable and Wire Co. Inc., Hauppauge, N.Y.; CME Wire and Cable Inc., a subsidiary of Conductores Monterrey, a Mexican manufacturer of wire and cable products; United Copper Industries, Denton, Texas; and Marmon Group Inc., Chicago.
A Southwire press release said its latest acquisition, along with organic investment, will further increase its manufacturing capacity and “strengthen its position as a leader in fill rates and lead times across its broad product offering.” During the next 15 months, Southwire plans to invest at least $250 million in new equipment and working capital related to building wire and MC cable.
In addition to the Essex acquisition, Southwire is continuing to invest in its existing production operations — including drawing, stranding, extruding, jacketing, and armoring. These investments will be spread across all of Southwire’s North American factories, including its new facility in Tecate, Mexico. Plans are also underway to establish a new plant in the west Georgia area by the end of 2006.
To support this increased manufacturing capacity, Southwire is expanding its copper rod mill in Carrollton, Ga., which produces rod used in building wire and energy cable products. Additionally, the company is enlarging its master service centers in Indianapolis, and Ontario, Calif., and is implementing additional cutting and paralleling capabilities. Construction is also underway to double the space at the company’s master service center in Villa Rica, Ga.
Through several key acquisitions and expansions in recent years, Southwire has built on its broad North American presence, with manufacturing plants and distribution centers strategically located across the continent,” said Jack Carlson, president of Southwire’s Electrical Division. “With its proximity to Southwire’s headquarters in Carrollton, the Essex Florence plant fits perfectly into the company’s manufacturing and distribution network. As part of Southwire, Florence is positioned to become one of the most efficient building wire plants in the country.”
Upgraded in recent years, the plant operates with nearly new equipment. Since June 2003, Essex has made substantial investments to upgrade and enhance the Florence facility, including the installation of new, state-of-the-art equipment along with upgraded machinery and