LS Group to spin off telco cable biz from U.S. SPSX for potential NASDAQ listing

LS Group headquarters [Courtesy of LS Group]

Superior Essex Inc. (SPSX), the largest North American wire company acquired by South Korea’s LS Group in 2008, will spin off its telecommunications cable business and receive $150 million in investment from Korean financial institutions, paving the way for an early listing of the business on the NASDAQ.

According to sources in the investment banking industry on Thursday, LS Group has recently reached an agreement with SKS Credit Co, a Korean private credit fund operator, to secure the desired investment.

SKS Credit plans to involve major domestic commercial banks as limited partners in its investment. The telecommunications cable division of SPSX, with an estimated value of $750 million, is the primary focus of this investment. Once the investment is finalized, SKS Credit will acquire an about 20 percent stake in the business.

Sources said LS Group and SKS Credit intend to expedite the listing process of the business division on the NASDAQ upon the completion of the investment. SPSX, headquartered in Atlanta, Georgia, is a global leader in the manufacturing of power and telecommunications cables. LS Group acquired the company back in 2008, allowing LS Cable & System Ltd. to expand its market presence and capitalize on the established reputation and expertise of SPSX.

Notably, LS I&D Ltd., a subsidiary spun off from LS Cable & System in 2013, currently holds a 100 percent stake in SPSX through its investment firm Cyprus Investment Inc. The upcoming investment and potential NASDAQ listing mark a significant milestone in the strategic development of LS Group’s business portfolio.

LS Group’s acquisition of SPSX in 2008 made headlines as a groundbreaking transaction in the market. The $900 million deal represented the first instance of a large-scale acquisition and an ensuing tender offer of a foreign company by a Korean entity. The acquisition instantly propelled LS Cable & System to become the world‘s third-largest wire and cable manufacturer, solidifying its position as a key player in the industry.

The telecommunications cable division of SPSX specializes in the production and supply of various communication cables and related accessories, including fiber optic cables, copper cables, and cables for distributed antenna systems (DAS). In the North American market, SPSX currently holds the second-largest market share of 16 percent.

The telecommunications cable industry is experiencing rapid growth, primarily driven by advancements in technologies like 5G communication. As countries worldwide strive to enhance their communication infrastructure, the need for efficient and reliable cable solutions becomes paramount. Advanced markets such as the U.S. and Canada face the challenge of replacing aging communication cables and expanding capacity to accommodate the increasing demand for high-speed and high-bandwidth communication networks. Moreover, Local companies like SPSX are well-positioned to benefit from the recent implementation of the Inflation Reduction Act (IRA) during the deployment of 5G communication networks.

SPSX also runs a power cable division with annual revenue surpassing $2.4 billion, but this division was excluded from the current investment plans possibly due to its profitability being near the breakeven point. Still, LS Group remains open to exploring future opportunities for a separate listing should the division’s profitability improve, sources said.

Combining both the power and telecommunications cable divisions, SPSX reported a total revenue of 3.90 trillion won last year, representing a remarkable 18 percent increase from a year ago.