Atkore (NYSE:ATKR) shares surged 28% on Monday to $93.40, after Prysmian S.p.A. (BIT:PRY) agreed to acquire the company for $95 per share in cash. The deal, valued at approximately $3.8 billion in enterprise value, is expected to close by the end of 2026. The current stock price sits just $1.60 below the offer price, representing a gross return of 1.7%.
This narrow spread is a key indicator of market confidence in the deal's completion. Investors who buy at current levels capture the remaining premium, but they also take on the risk of the transaction failing. The annualized gross return, based on a December 31 closing date, is approximately 4.2% before taxes and expenses.
Atkore has declared a quarterly dividend of $0.33 per share. When this dividend is factored in, the total gross return increases to 2.1%, which translates to an annualized return of approximately 5.1%. This is notably higher than the most recent 26-week Treasury bill rate of 3.95%, offering a premium of about 1.15 percentage points. However, this does not account for the risk associated with the deal's completion.
The offer price represents a roughly 30% premium over Atkore's closing price on July 31. Prysmian highlighted a 57% premium compared to September 29, 2025, the date before Atkore announced a strategic review. Additionally, the bid is 23% higher than the 90-day volume-weighted average price.
On a valuation basis, the deal appears more stretched when compared to current earnings. Prysmian cites a multiple of 9.8 times based on Atkore's projected adjusted EBITDA for fiscal 2025. However, based on Atkore's trailing twelve-month adjusted EBITDA of $325.8 million, the acquisition multiple increases to approximately 11.7 times. Prysmian plans to achieve $150 million in annual run-rate EBITDA synergies over three years, representing 46% of Atkore's trailing EBITDA. Factoring in these synergies, the deal's multiple reduces to roughly 8.0 times, though these synergies have yet to be realized.
Prysmian CEO Massimo Battaini commented, "Atkore fits well with our strategy to become more relevant in the United States." The acquisition will be funded with approximately 60% debt, over 20% hybrid securities, and about 20% equity. The deal has received approval from both companies' boards and is subject to shareholder vote and regulatory review.
Atkore reported its fiscal third-quarter results, showing revenue growth but margin pressure. Net sales increased 8.1% to $794.8 million, while adjusted EBITDA rose 4.7% to $104.7 million. Gross margin declined by 120 basis points to 22.2%, and adjusted EBITDA margin fell 43 basis points to 13.2%. Adjusted earnings per share increased 17.8% to $1.92, but GAAP net income plummeted 98.3% to just $0.7 million, largely due to litigation settlement expenses.
Segment performance was mixed. Electrical products saw sales growth of 10.9% and adjusted EBITDA growth of 10.0%, while Safety and Infrastructure posted only 1.3% sales growth and an 8.4% decline in adjusted EBITDA. Free cash flow for the nine-month period was negative $130.7 million, compared with positive $107.4 million a year earlier. Net debt increased by $160.2 million to $414.0 million since September 30.
Atkore has discontinued its 2026 profit outlook following the agreement and canceled its scheduled earnings call, but will proceed with a bondholder call on August 7. Key risks include potential approval delays, the risk of a failed shareholder vote, and ongoing input-cost pressures. The deal allows for an extension of the outside date from 12 months up to 18 months if certain regulatory conditions are met. With the stock trading near the offer price, the market is now pricing in a high probability of completion, leaving limited upside for new investors.
