Avenue Investment Management Expresses Concern Over Proposed Merger Between Encore Wire and Prysmian

TORONTO, April 18, 2024 /CNW/ – Avenue Investment Management, a leading investment management firm headquartered in Toronto, has formally expressed its reservations regarding the proposed merger between Encore Wire and Prysmian (BIT: PRY), announced on April 15th, 2024.

In a shareholder correspondence addressed to Mr. Jones, CEO of Encore Wire, Bryden Teich, Chief Investment Officer at Avenue Investment Management, emphasized the firm’s admiration for Encore Wire’s management and its sustained performance over the years. Teich underscored Encore Wire’s strategic positioning amidst multiple secular trends, including electrification, renewable energy transition, data center investments, and the onshoring of critical industrial capacity throughout America.

Avenue Investment Management, acting on behalf of its partners and clients who are shareholders of Encore Wire, voiced strong dissent against the proposed merger with Prysmian at a price of $290 per share. The firm believes that this valuation significantly undervalues Encore Wire’s long-term potential and would disadvantage long-term investors.

Teich highlighted Encore Wire’s consistent profitability across economic cycles, its high returns on invested capital (ROIC), low capital intensity, and robust pricing power. He commended Encore Wire’s prudent capital allocation strategy, particularly its share repurchase program, which has historically enhanced shareholder value.

In the shareholder correspondence, Avenue Investment Management presented a comprehensive analysis of three scenarios projecting Encore Wire’s future performance over the next decade. In each scenario, the present value of Encore Wire’s share price after 10 years exceeded the proposed $290 merger price, even under conservative assumptions.

Avenue emphasized the fiduciary responsibility of Encore Wire’s Board of Directors to maximize long-term shareholder value, asserting that the proposed merger price falls short of fulfilling this obligation.

About Avenue Investment Management

Avenue Investment Management is a leading investment management firm based in Toronto, Canada, specializing in equity investments across various sectors and geographies. Avenue Investment Management employs rigorous research and analysis to identify value-driven investment opportunities.

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SOURCE Avenue Investment Management