Prysmian launches public offer for Draka shares

Prysmian is offering €8.60 in cash plus 0.6595 newly issued Prysmian ordinary shares for each Draka ordinary share. That equates to a total transaction value of €840 million. Xinmao, with backing from China Minsheng Banking Corp. and Rabobank, has offered an all-cash package worth €1 billion.

Prysmian’s offer is valid from today through February 3. An extraordinary meeting of Draka shareholders will take place January 26 to discuss the Prysmian offer.

Prysmian first announced that Draka had accepted its offer November 22, 2010 (see “Prysmian lays out Draka takeover offer”). However, the offer contained an out clause that, for a price, would enable Draka to accept competing offers. Xinmao seized the opportunity almost immediately to announce its larger bid (see “China’s Xinmao to make all-cash bid for Draka”).

Despite the lower value of the offer, Draka has stuck with Prysmian as its preferred purchaser. “In determining its position, the Boards have also taken into consideration the positive advice received on 4 January 2011 from Draka's central works council, the current status of the discussions with Xinmao and the conditionality and execution risks attached to both the existing Offer by Prysmian and the potential offer by Xinmao,” Draka stated in a release issued yesterday.

“Draka has not received any further updates on the status of Xinmao’s potential offer since Xinmao’s press release, dated 20 December 2010,” the statement added. Bloomberg quoted Joop Krant of Catalyst Advisors, Xinmao’s financial advisor in the potential transaction, as saying Xinmao would not launch a hostile bid for Draka.