Anixter International and WESCO International said Monday in a statement that their boards of directors have unanimously approved a definitive merger agreement under which WESCO will acquire Anixter in a transaction valued at approximately US$4.5 billion.
Anixter’s prior agreement to be acquired by Clayton, Dubilier & Rice, LLC has been terminated, following CD&R’s waiver of its matching rights under the agreement.
WESCO International is a publicly traded Fortune 500 holding company headquartered in Pittsburgh, Penn. The company is a provider of electrical, industrial, and communications maintenance, repair and operating (MRO) and original equipment manufacturer (OEM) products, construction materials, and advanced supply chain management and logistic services.
The company states its 2018 annual sales were approximately US$8.2 billion. The statement issued Monday indicates the joined companies will enjoy synergies created by merging WESCO’s expertise in industrial, construction, and utility with Anixter’s expertise in data communications, security, and wire and cable.
Under the terms of the WESCO agreement, each share of Anixter common stock will be converted into the right to receive $70.00 in cash (subject to increase), 0.2397 shares of WESCO common stock and preferred stock consideration valued at $15.89, based on the value of its liquidation preference. Based on the closing price of WESCO’s common stock on January 10, 2020 and the liquidation preference of the WESCO preferred stock consideration, the total consideration represents approximately $100 per Anixter share.
Based on transaction structure and the number of shares of WESCO and Anixter common stock currently outstanding, it is anticipated that WESCO stockholders will own 84%, and Anixter stockholders 16%, of the combined company.
John J. Engel, WESCO chairman, president and CEO, said in a statement, “The transformational combination of WESCO and Anixter will create a premier electrical and data communications distribution and supply chain services company. With increased scale and complementary capabilities, we will be ideally positioned to digitize our business, expand our extensive services portfolio and supply chain offerings, and deliver solutions to our customers whenever and wherever they need them around the globe. Given the enhanced strategic profile and competitiveness of the combined company, we are confident we will deliver improved growth and earnings, and exceptional cash flow generation. We look forward to welcoming Anixter’s talented associates to the WESCO team as we embark on this next chapter and create substantial value for our stockholders, customers, suppliers, and people.”
“Today’s announcement is the culmination of a comprehensive process that showed, from the start, what a strong business the team at Anixter has built,” added Sam Zell, chairman of the Anixter board of directors. “The agreement with WESCO is a great result for our stockholders who will receive significant near-term value and stand to benefit from the combined company’s growth and prospects.”
“This is the result of a very thorough process to determine the value of our company,” said Bill Galvin, Anixter’s president and CEO. “It’s also a recognition of the enormous value created by our talented people, Anixter’s deep industry relationships, innovative technology solutions, and global reach. Looking ahead, the combination with WESCO will allow the combined company to build on our complementary capabilities and create new ways to serve customers and partners.”
Anixter first announced it would be acquired by private equity firm Clayton, Dubilier & Rice on Oct. 30 in an all-cash transaction valued at approximately US$3.8 billion. A higher offer from WESCO resulted in a series of counter proposals between the two companies and ultimately, WESCO’s most recent US$4.5B offer — a mix of cash and stock — was accepted.
Pending Anixter stockholder approval, regulatory approval and other customary closing conditions, the merger is expected to close in Q2 or Q3 2020.
The combined company will have pro forma 2019E revenues of approximately US$17 billion and will create “a leading electrical and data communications distributor in North America.” Approximately 12% of its revenues are expected to be generated outside North America.
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