After several rounds of back-and-forth between suitors, the bidding battle for Anixter International appears to now have a conclusion.
On Monday, WESCO International and Anixter each announced that the two large distributors have agreed on a $4.5 billion merger agreement that will result in an electrical and data solutions products supplier with approximately $17 billion in total 2019 sales.
The news comes four days after Anixter announced that WESCO’s latest bid of $100 per share in cash and stock was superior to that of Clayton, Dubilier & Rice — a private investment firm that acquired HD Supply’s Waterworks division in 2017 and hydraulic/pneumatic distributor SunSource in 2018. CD&R originally bid $81 per share in an acquisition agreement announced Oct. 30, 2019. That offer was later amended higher before WESCO proposed its own offer just before Christmas, and Anixter fielded another round of bids from those two companies before announcing Jan. 9 that it preferred WESCO's latest offer.
Anixter’s prior agreement to be acquired by CD&R has been terminated, following CD&R’s waiver of its matching rights under the agreement.
Monday’s announced agreement states that each share of Anixter stock will be converted into the right to receive $70 in cash, 0.2397 shares of WESCO stock and preferred stock consideration at $15.89.
“The transformational combination of WESCO and Anixter will create a premier electrical and data communications distribution and supply chain services company,” said John Engel, WESCO’s chairman, president and CEO. “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.”
Glenview, IL-based 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.
Pittsburgh-based 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.
“This is the result of a very thorough process to determine the value of our company," said Bill Galvin, Anixter 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.”