Atkore is merging with Italy’s Prysmian to bring together their expertise in electrification services.

  • Under the deal, Atkore shareholders will receive $95 per share in cash for each share of Atkore common stock.
  • The transaction will be funded with a mix of debt and equity, and is expected to close by the end of this year.
  • Separately, Atkore reported its results for the third quarter and issued a quarterly dividend.

Shares of electrification solutions firm Atkore (ATKR) surged in Monday’s premarket trade after the company agreed to merge with Italy’s Prysmian in a $3.8 billion deal to create an entity that will support the artificial intelligence infrastructure industry.

As of the writing, ATKR stock was up 28%, on track for its highest level in more than a year and a half.

Rationale For The Deal

The companies believe the merger will combine their respective capabilities in electrification solutions services and become a leading North American entity that will be able to serve the data center market better. The deal also comes nearly nine months after Atkore announced an initial strategic review of its operations.

Prysmian, which undertakes massive electrification projects on land and sea, is listed on the Italian stock exchange and generated about €20 billion in revenue last year. The deal will expand its product and service offering in North America, broaden its portfolio with complementary electrical infrastructure products, and provide it with exposure to long-term structural growth trends in electrification and data center investments.

"Electrification, AI-driven data centers and digitalization all require major investments in infrastructure, and they are critical to the modern economy, and the opportunity is substantial in the United States," said Massimo Battaini, Prysmian CEO. 

“This transaction is the culmination of our comprehensive strategic review process to maximize shareholder value and reflects the strength of Atkore’s differentiated portfolio of critical electrical infrastructure products,” said Atkore’s Chairman Michael Schrock.

Under deal terms, Atkore shareholders will receive $95 per share in cash for each share of Atkore common stock, reflecting a premium of about 30% to the stock’s closing price on July 31. The transaction will be funded with a mix of debt and equity, and is expected to close by the end of this year.

ATKR’s Q3 Numbers At A Glance

Separately, Atkore reported its results for the third quarter (Q3). The company’s total revenue rose 8.1% to $794.8 million, blowing past the Koyfin consensus estimate of $762.2 million. Adjusted earnings per share (EPS) came in at $1.92, much ahead of the $1.54 estimate.

Atkore’s board also approved a quarterly dividend payment of $0.33 per share of common stock, payable on August 28 to shareholders of record on August 18. The company did not provide an outlook due to its merger with Prysmian.

On Stocktwits, retail sentiment toward ATKR turned ‘bullish’ from ‘neutral’ over the last 24 hours. ATKR stock has gained over 15% so far this year but has declined by more than 5% over the past 12 months.

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