The ongoing acquisition saga between electronic, security and power solutions distributor Anixter, private investment firm Clayton, Dubilier & Rice (CD&R) and electrical/industrial distributor WESCO International took another turn on Thursday.
Glenview, IL-based Anixter, which originally announced Oct. 30, 2019 that it would be acquired by CD&R for approximately $3.8 billion at $81 per share, said Thursday that it now considers WESCO's latest $4.5 billion offer of $100 per share to be a superior proposal after several rounds of bidding between WESCO and CD&R.
“After careful review and consideration and consultation with our financial and legal advisers, the Board of Anixter has determined that the current WESCO offer is superior to the existing CD&R agreement,” said Sam Zell, chairman of Anixter.
Anixter said Thursday that it has notified CD&R of the board's determination favoring WESCO, and CD&R now has the option for the next five business days to negotiate an amended proposal that would top Anixter's.
Under the original merger agreement with CD&R, Anixter would be required to pay a $100 million termination fee to CD&R if Anixter terminates those two company's agreement and instead accepts WESCO's offer. Anixter said that WESCO has agreed to pay the termination fee in that case.
Thursday's news adds further drama to bidding war between WESCO and CD&R, with WESCO's latest offer now more than 23 percent higher than CD&R's initial offer that Anixter agreed to.
Here's a full timeline of the bidding battle, according to Anixter's news releases:
- Oct. 30, 2019: Anixter International Inc. Announces Definitive Agreement to be Acquired by Clayton, Dubilier & Rice in a $3.8 billion deal at $81 per share.
- Nov. 22, 2019: CD&R's proposal amended to $82.50 per share.
- Dec. 23, 2019: Anixter & CD&R agree to amended and restated merger agreement that increases CD&R's payable per-share consideration to $86 per share and total deal value of $3.9 billion.
- Dec. 24, 2019: WESCO International confirms proposal to acquire Anixter with an offer of $90 per share.
- Dec. 26, 2019: WESCO submits improved proposal of $93.50.
- Dec. 27, 2019: Anixter confirms it will consider WESCO's revised offer.
- Jan. 2, 2020: Anixter announces amended & restated merger agreement with CD&R in a deal at $93.50 per share and total value of approximately $4.3 billion.
- Jan. 3, 2020: WESCO submits improved proposal of $97.00 per share in cash and stock. Anixter confirms it will consider WESCO's improved proposal.
- Jan. 9, 2020: WESCO confirms revised proposal of $100 per share in cash and stock in a deal valued at approximately $4.5 billion. Anixter confirms it has received the offer and determines it a superior proposal over CD&R's.
Anixter had 2018 full-year sales of $8.4 billion and a net profit of $156 million. Most recently, the company posted 2019 third quarter sales of $2.22 billion, up 2.0 percent year-over-year, while net profit of $59 million jumped 25 percent. The company was a mainstay on Industrial Distribution's annual Big 50 List — last charting at No. 7 in 2015 — before selling off its OEM Fasteners Division for $380 million to American Industrial Partners in early 2015. That divested segment eventually became a new fastener distributor — Optimas Solutions — which launched in 2016 and was No. 19 on ID's Big 50 List with $921 million in 2018 sales. Since 2015,, ID has considered Anixter as an electrical distributor.
WESCO International has also been in or near ID's Big 50 top 10 in recent years, checking in at No. 11 in 2019 based on its $3.0 billion in industrial products sales in 2018. WESCO had total 2018 sales of $8.2 billion and net profit of $227.4 million. Most recently, WESCO posted 2019 Q3 sales of $2.1 billion, up 3.9 percent year-over-year, while net profit of $64.5 million compared with $66.8 million a year earlier. WESCO will report its 2019 fourth quarter and full-year financial results on Jan. 30.
Meanwhile, CD&R has made major waves in the industrial supply space in the past few years. In the summer of 2017, it acquired HD Supply's Waterworks division for $2.5 billion, with that division then rebranding as Core & Main. That following December, CD&R acquired SunSource, a privately-held distributor of hydraulic and pneumatic fluid power products that was No. 17 on ID's 2018 Big 50 List. In the summer of 2018, SunSource acquired United Distribution Group, which was most recently No. 24 on ID's 2017 Big 50 List.