GenTek to Acquire Digital Communications Group of Prestolite Wire Corporation
6 July 2000
Expanded Telecommunications Segment to Generate More Than $450 Million in Annual Sales
HAMPTON, N.H. - GenTek Inc. announced today that it has agreed to acquire
the Digital Communications Group of Prestolite Wire Corporation, a privately
held company, for $90 million in cash.
Prestolite's Digital Communications Group manufactures voice- and data-
quality copper and fiber-optic cable for the telecommunications industry. The
group generated revenue of $72 million in 1999 and is expected to generate
revenue in excess of $100 million in 2000.
The company offers a comprehensive range of structured cabling products,
including:
-- TrueNet(TM)-branded Category 5, 6 and 7 copper cable for high bandwidth
data transmission;
-- T-1/DS-1 and high-pair-count cabling for voice and data transmission in
public networks;
-- Single- and multi-mode fiber-optic cables for the telecommunications
market;
-- Highly engineered fiber-optic cables for use in harsh environments,
military operations and other specialized applications; and
-- Hybrid fiber/copper cables for specialty and multi-media applications.
"Prestolite's Digital Communications Group fits well with Krone, GenTek's
principal telecommunications subsidiary, and will be immediately accretive to
GenTek's earnings," said Paul M. Montrone, chairman and controlling
shareholder of GenTek. "This combination will allow GenTek to provide
complete connectivity and structured cabling systems that maximize network
bandwidth and speed. We are particularly excited by the prospects for the
Digital Communications Group's optical fiber division, Northern Lights Cable,
which is experiencing solid growth and will add important product development
capabilities to Krone's existing optical fiber activities."
As a result of this transaction, GenTek's telecommunications segment will
generate pro forma annualized sales of more than $450 million.
In addition to being the controlling shareholder of GenTek, Mr. Montrone
is also the controlling shareholder of Prestolite Wire. As such, the
transaction was approved by a special committee of independent directors of
GenTek. The special committee retained and was advised by Morgan Stanley &
Co. Incorporated and Kirkland & Ellis. Morgan Stanley provided a fairness
opinion to the committee, stating that the transaction was fair from a
financial standpoint to GenTek.
Prestolite's Digital Communications Group has been winning major digital
subscriber line (DSL) infrastructure supply contracts from incumbent
telecommunication service providers as well as competitive local exchange
carriers (CLECs). Combining the Digital Communications Group's success in
this area with Krone's connectivity expertise will position GenTek to take
further advantage of the explosive growth in DSL and other broadband Internet
applications worldwide.
The combination also will enhance the marketing of Prestolite's
TrueNet(TM) cabling systems, the most advanced local area network (LAN)
solution on the market today. This exciting new technology has been selected
by a number of Fortune 500 companies around the world for their LAN system
deployments. Krone connectivity is an integral part of this high-bandwidth
gigabit Ethernet system and enables the combined company to offer a turnkey
local area network that provides unsurpassed network reliability and
efficiency.
Headquartered in Denver, Colo., the Digital Communications Group operates
manufacturing facilities in Sidney, Neb., and North Bennington, Vt.
Additional information regarding the synergies of this acquisition is
available in the attached table.
The acquisition of Prestolite's Digital Communications Group, GenTek's
fourteenth acquisition since 1997, is expected to close during the third
quarter and is subject to regulatory approval.
GenTek Inc. is a technology-driven manufacturer of telecommunications
equipment and other products.
Table I
GenTek and Prestolite Digital Telecommunications
Product Synergies
Krone Prestolite Wire Applications
LAN System TrueNet(TM)-Enhanced High-Bandwidth Data
Connectivity Cabling Systems Transmission
Solutions at Gigabit Ethernet Speeds
Wide Area Network/ DS-1/T-1 High-Speed Wide Area Network Solutions,
Co-Location Cabling Systems including those in public
Connectivity network central offices and
co-location environments, for
all forms of DSL service and
other broadband applications
Krone(R) Optical Single- and Multi-Mode Optical fiber solutions for
Connectivity and Fiber Optic local and wide area networks
Hardware Transmission Cabling
Private Branch Category 1-3 Voice Voice-grade Telephony
Exchange Transmission Cabling
(PBX) Connectivity