TORONTO, April 18,
2024 /PRNewswire/ - 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