Sales: EUR 4.32 billion ($4.5 billion) (2002)
Stock Exchanges: Euronext Paris
Ticker Symbol: NEX
NAIC: 335931 Current-Carrying Wiring Device Manufacturing; 334290 Other Communication Equipment Manufacturing; 335999 All Other Miscellaneous Electrical Equipment and Component Manufacturing
France’s Nexans SA is one of the world’s largest manufacturers, installers, and integrators of cables and systems, holding the number three spot behind Italy’s Pirelli and Japan’s Sumitomo. Yet Nexans, formerly known as Alcatel Cable, holds leadership positions in a number of key markets, including the worldwide lead in winding wires and submarine power cables and the European lead in wirerod, telecom network copper cables, equipment cables, and data transmission specialty cables. The company is also the number two global manufacturer of LAN and power cables, and number two in Europe for bare wires and high- and medium-voltage power accessories. Nexans operates through three primary divisions: Telecommunications; Energy, including power transmission and distribution; and Electric Wires. These divisions focus on the three key markets of Infrastructure, Industry, and Buildings. Energy alone accounts for 52 percent of sales, which topped EUR 4.3 billion in 2002, while Electric Wires contributes 26 percent, and Telecommunications adds 14 percent. Nexans operates manufacturing facilities in nearly 30 countries, and has sales organizations in 65 countries. Europe represents the group’s largest market, at 68 percent of revenues. Elsewhere, North America contributed 20 percent of the group’s sales in 2002. The company, hit by the economic slowdown at the beginning of the new century, has started a restructuring effort since 2002, closing a number of its plants. Nonetheless, Nexans, which based much of its growth in the 1990s on acquisition, continues to seek new opportunities, such as an agreement to acquire Korea’s Kukdong Electrical Wires in 2003. Nexans is listed on the Euronext Paris stock exchange and is led by Chairman Gerard Hauser.
Cabling Pioneer at the Turn of the 20th Century
Waterproof electric cable was invented in 1879 by François Borel, of Switzerland, who later formed Berthoud, Borel & Company to develop the system, which consisted of wrapping wire with bituminous paper, which was then sealed with lead. The invention caused a revolution in a number of nascent industries, notably in the telecommunications and electrical power industries.
In 1897, the Société Française de Câbles was formed to manufacture cables using the Berthoud, Borel system in Lyon, France. By 1912, that firm, which became known as Société des Câbles Electriques, found an important shareholder in Compagnie Générale d’Electricité (CGE). The CGE had been founded only in 1898, but by then had already become one of the most prominent companies in France’s growing electrical power sector, with operations spanning both power generation and distribution and manufacturing.
CGE’s growing business helped to drive the growth of Société des Câbles Electriques as well. The growing relationship between the two companies was highlighted by renaming the cable manufacturing business Compagnie Générale des Câbles de Lyon in 1917. By 1925, CGE had completed the acquisition of Câbles de Lyon, which became a separate division of CGE. The division grew again in 1938 after CGE’s acquisition of Société Industrielles de Téléphones, which operated cable manufacturing facilities in Bezons and Calais. These were placed under the Câbles de Lyon division.
Following World War II—in which CGE, taken over by the German occupying forces, had seen a large number of its facilities bombed—the French government nationalized the country’s utilities operations. CGE then concentrated on its manufacturing operations, focusing especially on building up its operations in the manufacturing of electrical and telecommunications components and systems, including cables and wires. During the 1950s, CGE diversified rapidly, entering various fields including consumer appliances, forcing a restructuring of its operations in the 1960s, with Câbles de Lyon taking over all of the company’s cable and wire operations.
In 1969, CGE acquired Alcatel, founded in 1879 as the Société Alsacienne de Construction Mécanique, and which had become one of the leading manufacturers of telecommunications technologies. The Alcatel acquisition boosted CGE’s own telecommunications operation, CIT—the two companies were merged to form CIT-Alcatel—and also stepped up Câbles de Lyon’s business as well.
Joining the World’s Leaders in the 1980s
Câbles de Lyon began building scale during the 1970s, acquiring French rival Câbles Geoffrey et Delore in 1970. At the end of that decade, the company added to its French holdings with the purchase of Câbleries de Lens in 1979. The following year, Câbles de Lyon added a subsidiary in Greece, with the acquisition of Chandris Cables. In 1981, the company moved into the United States, with the purchase of a stake in that country’s Chester Cables.
By the beginning of the 1980s, Câbles de Lyon already held a leading position in the European cable market, with annual sales of some FFr 3 billion. In 1982, however, the company neared the industry’s top spot with the acquisition of Kabel- und- Metallwerke, Germany’s fourth largest manufacturer of cables and wires. That acquisition added another FFr 2 billion to Câbles de Lyon’s sales, boosting it into Europe’s second place position.
CGE was nationalized by the French government in 1982. The following year, the government transferred another nationalized company, Thomson, into CGE. As a result of that merger, Câbles de Lyon absorbed two Thomson subsidiaries, Kabeltel and Thomson Jeumont Câbles. That year, also, Câbles de Lyon took over another cable manufacturer, Gorse. The cable division continued acquiring scale into the mid-1980s, adding Tréfilerie et Laminoir de la Méditerranée and Belgium’s Câbleries de Charleroi, both in 1986.
That year, however, marked an even more significant change for Câbles de Lyon, after CGE and ITT announced their agreement to merge their telecommunications operations into a new joint venture, Alcatel NV, to be held at 65 percent by CGE. Under an extension to the original joint venture agreement, CGE agreed to add a 65 percent stake in Câbles de Lyon, which was then combined with ITT’s Valtec fiber optics and other cable operations to create a newly enlarged Câbles de Lyon.
CGE was re-privatized in 1987, in one of France’s largest ever public offerings. Câbles de Lyon continued its acquisition drive, buying, in that year, Thomson Cuivre, in a move toward vertical integration. The following year, Câbles de Lyon, shortly to become known as Alcatel Cable, purchased France’s Société Nouvelle de Câblerie Barelec; Greece’s Manouili Hellas Cables; and Italy’s Manuli Cavi, the second largest cable maker in that country, behind Pirelli. The latter purchase, which added more than FFr 1.3 billion to Alcatel Cable’s revenues, helped raise the company’s total revenues to nearly FFr 15 billion in 1988. The following year, the company raised its European position still higher with the acquisition of Belgium’s Câbleries de Dour.
Pure Play Cables Group in the 20th Century
Not all of Alcatel Cable’s growth came through acquisitions: in 1990, the company began construction of a new fiber optic cable plant in the United States. By the end of that year, Alcatel Cable’s sales had swollen to FFr 24.8 billion. Yet acquisitions remained a primary growth vehicle in the early 1990s for the company. In 1991, Alcatel Cable bought Canada Wire and Cable, a subsidiary of Canada’s Noranda and the largest cable and wire manufacturer in the country, with 11 plants in Canada and three in the United States. The Canada Wire and Cable purchase also gave Alcatel Cable an entry into the South American market.
Yet Germany received Alcatel Cable’s primary expansion efforts, when the company bought four companies there, Vacha Kabel, located in the former East Germany; Lacroix & Kress, which had been part of Raytheon since the early 1970s; another cable manufacturer, Ehlerskabelwerk; and lastly, AEG Kabel, a division of Daimler-Benz. These purchases raised Alcatel Cable to the number two position in Germany and to the number one spot worldwide. The company also picked up operations in Turkey, acquiring that company’s Erkablo.
Two more significant acquisitions came in 1993. In November of that year, the company acquired the United States’ Berk-Tek Inc., based in Pennsylvania, adding that company’s electronic and fiber optic cable operations. By then, the company had also entered into an agreement to acquire STC Submarine Systems, part of Northern Telecom, for £600 million ($800 million). That acquisition received approval in February 1994. Later that year, Alcatel Cable acquired Switzerland’s Cortaillod-Cossonay—which had inherited the original Berthoud, Borel & Cie.
Alcatel hit a bump during the mid-1990s, however. Caught off-guard by the rise of fiber optics-based cables—which introduced a new stream of competitors—and by the increasing internationalization of the telecommunications market in the wake of a wave of privatization efforts, Alcatel Cable found itself facing losses. The company underwent a vast restructuring effort, which deepened its losses to nearly FFr 4 billion ($800 million) by 1996. In that year, Alcatel NV took over the remainder of Alcatel Cable, and the company became a wholly owned subsidiary of the larger group.
In each of its three key markets, Nexans provides its expertise and can offer global solutions.
By 1997, Alcatel was once again turning out profits. That year saw the company enter Asia with two Indonesian joint ventures to produce fiber optic and submarine cables for the Asian market. The company’s Swiss interests were enhanced with the creation of Alcatel Cable Switzerland, bundling its Cortaillod-Cossonay operations with those of Cabloptic and BK Breitenbach Kabel. The following year, the company acquired the North American and Portuguese subsidiary of Japan’s Optec Dai-Ichi Denko Co., part of the Mitsubishi Group.
Alcatel NV began preparing to streamline its own operations in the late 1990s in order to focus on its core communications business. In May 2000, the company announced its intention to spin off Alcatel Cable as a separate company, called Nexans. Initial plans called for a public offering of Nexans by the end of that year. Poor market conditions forced Alcatel to wait until June 2001. The offering, which reduced Alcatel’s stake to just 30 percent, was oversubscribed by some 6.5 times.
The newly independent Nexans, led by Gerard Hauser, was now able to plot its own growth strategy. Acquisitions nonetheless remained a key part of the company’s future, as it raced to regain its top spot—having lost out to Italy’s Pirelli and Japan’s Sumitomo during the 1990s. By the end of 2001, the company had already found its first takeover target, that of South Korea’s Daesung. In mid-2002, the company struck again, picking up Germany’s Petri, a maker of power cable accessories. By the end of that year, the company had reached an agreement to acquire another Korean company, Kukdong Electrical Wires Company, a deal expected to be completed during 2003.
Hit by the difficult economic climate, Nexans engaged in a new round of restructuring, including shutting a number of its plants, which led to a loss of EUR 40 million, on EUR 4.3 billion in 2002 revenue. Nonetheless, the company expected to return to profitability by the end of 2003. Meanwhile, Nexans had already targeted expansion in South America, announcing its January 2003 agreement to acquire Brazil’s Furukawa, one of that country’s leading cable manufacturers. Acquisitions appeared to remain a key part of Nexans as it entered the new century.
Nexans France; Nexans Wires; Société de Coulée Continue du Cuivre; Société Lensoise du Cuivre SA; Nexans Deutschland Industries AG & Co (Germany); Lacroix & Kress GmbH (Germany); Nexans Benelux (Belgium); Nexans Holding Norway A/S; Nexans IKO Sweden A/B; Nexans Suisse SA (Switzerland); Nexans Italia Spa (Italy); Nexans Iberia SL (Spain); Nexans USA Inc.; Nexans Canada Inc.; Nexans Maroc (Morocco; 56.8%); Nexans Hellas SA (Greece; 71.7%); Nexans Korea Ltd (51.5%).
Telecommunications; Energy; Electric Wires.
Sumitomo Electric Industries Ltd.; Adolf Wurth GmbH und Co. KG; Pirelli C SpA; Hitachi Cable Ltd.; Fujikura Ltd.; Corning Inc.; Draka Holding NV; Essex Group Inc; Raychem Corp.; Alpine Group Inc.; Superior Telecom Inc.; Southwire Co.; General Cable Corp.; W.L. Gore and Associates, Inc.; ACT Manufacturing Inc.; LEONI AG; JDS Uniphase Corp.; Taihan Electric Wire Company Ltd.; Showa Electric Wire and Cable Company Ltd.; Amphenol Corp.; Pirelli General PLC; Belden Inc.; Andrew Corp.; Delta PLC; Datwyler Holding Inc.
- François Borel invents waterproof electrical cables.
- Société Française de Câbles is formed in Lyon.
- CGE acquires Câbles de Lyon.
- CGE acquires Société Industrielles de Téléphones, and transfers its cable manufacturing facilities to Câbles de Lyon.
- Câbles de Lyon acquires Kabel und Metallwerke of Germany.
- Company acquires Thomson Jeumont Cables and Kabeltel.
- Company merges with ITT’s cable operations after CGE and ITT merger.
- Now named Alcatel Cable, company acquires AEG, Vacha Kabel, Lacroix & Kress, Ehlerskabelwerk, and Canada Wire & Cable.
- Alcatel NV takes full control of Alcatel Cable.
- Alcatel spins off cable manufacturing operations as Nexans.
- Nexans lists on Euronext Paris stock exchange.
- Nexans acquires Petri in Germany and Kukdong in Korea.
- Company acquires Furukawa in Brazil.
Buchan, David, “Alcatel’s Cable Unit Sees FFr4bn Loss for Year,” Financial Times, January 16, 1996, p. 26.
Minder, Raphael, “Nexans Lowers Forecast As US Slowdown Bites,” Financial Times, October 11, 2001, p. 32.
“Nexans’ Eu473m IPO Draws Strong Investor Support in Aftermarket Amid More Bad News,” Euroweek, June 15, 2001, p. 22.
“Nexans Snaps up Furukawa,” Brazil Business News, January 15, 2003.
“Nexans to Acquire Kukdong Electrical Wires,” Safety at Sea International, January 2003, p. 22.
Owen, David, “Alcatel Delays Nexans IPO for New Ideas,” Financial Times, November 1, 2000, p. 32.