24 Dec '09
Oleg Kouzbit, Online News Managing Editor
Italy’s Prysmian Cables and Systems has completed a $16.5m takeover of 100% of Rybinsk-based cable holding Rybinskelektrokabel in Yaroslavl Region. According to Prysmian, Rybinsk is the ‘perfect platform’ to launch its further investment programs into the hi-tech segments of Russia’s power cable business.
Last week Italy’s Prysmian Cables and Systems reported the conclusion of its first Russian acquisition—a $16.5m takeover of Rybinsk-based cable-maker Rybinskelektrokabel in Yaroslavl Region.
The purchase included the main production site, an R&D division and Rybinskelektrokabel’s retail and wholesale arm.
Interfax quoted a company spokesman as saying Yaroslavl regional authorities had hailed the deal and promised to give the investor ‘the green light’.
According to Prysmian’s chief executive, Valerio Battista, the Rybinsk factory is a ‘perfect platform,’ on which the Italians plan further investment programs elsewhere in Russia.
The company reportedly aims to become a significant player in the high-voltage cable sector and is gearing up for Russia-based expansion of its hi-tech international electric business. Mr. Battista is bullish and said he expects the company’s Russian operations turnover to triple over the next three years.
Currently Prysmian supplies its Russian high-voltage projects with cables imported from its European sites.
Rybinsk’s glory days
The city of Rybinsk with some 200,000 population, 50 miles north of ancient Yaroslavl, has more than 230 years of history marked by its role of a merchant trading hub.
During the Soviet era, Rybinsk was a so-called ‘closed’ city, a centerpiece of the country’s growing industrial might; alongside cities like Gorky (now Nizhny Novgorod) or Kuibyshev (now Samara) it had one of Russia’s highest ratios of military-oriented mechanical-engineering, nuclear and radio electronic factories per square mile.
Post-Perestroika however, Rybinsk lost much of its prominence. State orders dried up and there was little incentive to bring aging facilities up to global standards. The city still has the well-regarded Saturn plant that is a high tech design center and aircraft engine builder.
The investor profile
The Italian firm is one of the largest international companies to enter the Rybinsk industrial market.
Prysmian Cables and Systems is a leading global player in the hi-tech cable sector with more than $7.5bn sales in 2008 and a strong foothold in this high added value market segment. Its product line comprises both multi-purpose energy cables and systems, and telecom cables, including FOCLs.
Represented in 38 countries, and running 53 production companies and seven major R&D centers in 21 countries in Europe and Americas, the group employs more than 12,000 people and its stock is one of the blue chips on the Milan exchange.
Toughing it out
Rybinskelektrokabel was founded in 1949 and at one time was a leading producer of cable. It presently specializes in power cables and plastic-insulated wires for low-voltage electrical grids, but also makes limited items for telecom and telemetry projects. The company ended last year with around $54m in sales.
From a high-flying cable producer in the 1980s, Rybinskelektrokabel got nearly wiped out in the new Russia. The company went under but through painful restructuring and the dumping of non-core assets, the firm was eventually back on the ball. Once employing more than a thousand, today the company only has 360 people.
Looking for a piece of $15bn
Sector experts at Russia’s industry-specific portal, RusCable, consider the takeover a smart move. They believe it will give Prysmian competitive advantages and help the company establish a solid presence in a market with tremendous potential.
They point to the $15bn Russia’s electric grid companies have purportedly stashed away for long-term investment in the sector. According to Russia’s Elektrokabel Association, between 2010 and 2012 the market may grow to $3bn, with the highest growth forecast in the high-voltage segment.