Wesco Aircraft Holdings to Acquire Haas Group Inc.

With $573.5 million in 2012 revenues, Haas is a leading global provider of chemical supply chain management solutions to the commercial aerospace, airline, military, energy, and other markets. Haas is headquartered in West Chester, PA.

Valencia, CA - Wesco Aircraft Holdings, Inc. announced that it has entered into an agreement to acquire Haas Group Inc. for $550 million in cash, subject to certain closing adjustments, from certain investment funds affiliated with The Jordan Company, L.P.

With $573.5 million in 2012 revenues, Haas is a leading global provider of chemical supply chain management (“CSCM”) solutions to the commercial aerospace, airline, military, energy, and other markets. Haas is headquartered in West Chester, PA, with over 1,300 employees and 35 distribution hubs and forward stocking locations around the world.

Wesco’s strategic rationale for the acquisition includes:

  • Acquisition of a leader in the large and growing area of CSCM, with an addressable market currently estimated at more than $2 billion
  • Compelling customer value proposition, helping customers to reduce costs and comply with increasingly complex regulatory requirements for chemical usage
  • Haas’ proprietary IT system (tcmIS) that interfaces directly with customer and supplier enterprise resource planning systems
  • Significant expansion of Wesco’s customer base; many opportunities to increase sales by leveraging and cross–selling into each company’s respective base of customers
  • Addition of more than 125,000 SKUs from over 5,000 suppliers
  • Experienced senior management team with a proven record of success; business will continue to be led by the current CEO, Thad Fortin

Randy Snyder, Chairman and CEO of Wesco said, “We are very excited about this opportunity to bring Haas and its outstanding employees into the Wesco family. We believe that the acquisition of Haas will provide significant opportunities for Wesco to continue growing at above-market rates. The culture, capabilities, and scope of Haas’ global business are an ideal fit for the Company. The acquisition of Haas will add over 125,000 SKUs, value added supply chain management solutions and a world class group of over 1,300 employees to Wesco.”

Thad Fortin, CEO of Haas added, “We are excited to be working with a company with the reputation and proven performance of Wesco, and for the many opportunities this combination will bring for Haas employees. We believe this combination will further strengthen the value proposition for our customers, and we look forward to contributing to Wesco’s continued growth and success.”

The acquisition is expected to be financed by a new $525 million term loan B facility (“Term Loan B”) to be added to the Company’s existing senior secured credit facilities, cash on hand and drawings under the Company’s existing revolving credit facility, with the Term Loan B expected to be provided by a group of lenders led by BofA Merrill Lynch. Wesco expects the acquisition, which has been unanimously approved by the boards of directors of Wesco and Haas, to close by the end of the first calendar quarter of 2014, subject to customary closing conditions.

The Company plans to provide additional information regarding the acquisition at the time of its upcoming fiscal first quarter 2014 earnings call to be held on Wednesday, February 5, 2014 at 5:00 pm ET.

Evercore is acting as financial advisor and Latham & Watkins LLP is serving as legal advisor to Wesco. Harris Williams & Co. is acting as financial advisor and Mayer Brown LLP is serving as legal advisor to The Jordan Company.

Preliminary Results for the First Fiscal Quarter of 2014

In advance of the earnings call scheduled for February 5, 2014, the Company is also providing preliminary estimates of its results for the first fiscal quarter of 2014. Revenues for the quarter are expected to be between $223 to $227 million, an increase of between 5.6% to 7.5% compared to the prior year period. Diluted EPS is expected to be between $0.24 to $0.26, compared to $0.19 in the prior year period, with Adjusted Diluted EPS between $0.26 to $0.28, compared to $0.25 in the prior year period.

Greg Hann, Chief Financial Officer of Wesco said, “We continued to experience strong organic revenue growth, despite one less workday for Wesco during the quarter compared to the prior year. In addition, we experienced unexpected prolonged holiday shutdowns and vacations by a number of our top customers. We estimate that the combination of these factors led to a reduction of approximately $0.02 to our Adjusted Diluted EPS for the quarter. We expect to recover these earnings over the course of the coming months.”

He continued, “At this time we are reiterating our original guidance for revenues of between $975 million to $1.01 billion, and Adjusted Diluted EPS of between $1.31 to $1.37 for this fiscal year. We expect the acquisition of Haas to be accretive upon closing to our Adjusted Diluted EPS, and plan to update our full year guidance to reflect the acquisition after the transaction closes.”