Paramount to acquire AEI Cable

New Delhi-based Paramount Communications is close to acquiring Britley, UK-based AEI Cables. An announcement to this effect is expected to come shortly, if not tomorrow.

Sources close to the development said the deal size would be in the range of Rs 250-260 crore. UK-based investment banking firm Elara Capital is the adviser to Paramount. Sanjay Aggarwal, chairman and CEO, Paramount Communications, declined comments.

They added that the power cable maker Paramount would borrow for financing the deal, which would be around 80 per cent of the company's sales last year. Paramount last year posted a net profit of Rs 37.5 crore over net sales of Rs 318 crore. Last year, it had raised $15 million (Rs 60 crore) through a GDR issue.

According to a banker, AEI would appear to be a good buy at Rs 250-260 crore against its last year's sales of pounds 60 million (Rs 496 crore).

AEI, an established brand across the globe for over 180 years, managed to post a minimal profit last year.

TT Electronics, the promoters of AEI, has put the company on the block for quite some time as cable-making does not fit into the electronics company's core area of operations. TT Electronics bought it from General Electric 10 years ago. William Thomas Henley, who pioneered the development of submarine telegraph cables, founded the company in 1837.

AEI has manufacturing units in Birtley in Durham. It is a specialist in the design and manufacture of elastomeric and thermoplastic cables for voltages up to 20 kv. It provides cable solutions in construction, defence, fire protection, industrial, mining, oil and gas, power and rail.

The acquisition will give Paramount access to markets such as Hong Kong, West Asia, Africa and the Caribbeans and the UK, where the AEI brand is well known. It would also scale up Paramount's turnover to over Rs 800 crore in one stroke. Also, Paramount will have an access to new segments such as construction and defence.

Paramount provides cabling solutions to power, telecom and IT, railways and petrochemical industries. It has a flexible manufacturing capacity to shift focus on manufacturing one type of cable to another.