WESCO’s courtship of Anixter took an interesting turn today with the news that the company has made a new offer to purchase the Glenview, IL-based Anixter International with an improved proposal for $93.50 per share in cash and stock.
John Engel, WESCO's chairman, president and CEO, said in the release, "This transaction would advance WESCO's strategic objective of becoming a leading service-focused global supply chain solutions company. With increased scale, complementary capabilities and industry-leading technologies, together, we would 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.”
According to press releases from Anixter and WESCO, the new proposal includes “consideration per Anixter share of $63.00 cash plus a fixed exchange ratio of 0.2397 shares of WESCO common stock plus $16.65 of a newly created class of WESCO perpetual preferred stock. Based on the closing price of WESCO's common stock on December 26, 2019, the total consideration represents $93.50 per share.”
An Anixter press release published today said it would review WESCO’s proposal in the context of the current Ammended Merger Agreement it now has in place with Clayton, Dubilier & Rice (CD&R). As part of that agreement, which was announced on Dec. 23, “Anixter shareholders would receive $86 in cash per share and a contingent value right entitling them to an additional $2.50 in cash per share if CD&R, or any fund managed by CD&R, within one year after the closing of the Anixter acquisition, enters into a definitive agreement to acquire WESCO or to sell Anixter to WESCO, which amount would be payable only upon completion of such acquisition or sale.”
The WESCO release offered an interesting analysis of what a WESCO-Anixter union would mean to employees, customers, investors and the electrical market.
Enhances scale and global position. WESCO said the combined company would have significantly enhanced scale, with pro forma 2019 estimated revenues of approximately $17 billion. WESCO would also have increased international exposure, with approximately 9% of revenues generated outside of the U.S.” The increased scale would enable the combined company to invest in digital transformation and innovation on a faster timetable and provide a platform for growth in attractive emerging markets,” according to the release.
If the two companies get together, their combined revenues would vault them into the top position in Electrical Wholesaling’s Top 200 listing, which is currently occupied by Sonepar and its $10 billion-plus in 2018 North American revenues.
Broadens and diversifies product portfolio. The deal would also add Anixter's commanding position in data communications, security, and wire and cable to WESCO’s well-established niches in the industrial, construction, utility and commercial, institutional, and government markets.
WESCO also believes the acquisition would create more than $200 million in operational savings and mutual synergies, including “a reduction in corporate and regional overhead, including duplicative public company costs, branch and distribution center optimization, and efficiencies in procurement, field operations and supply chain. In addition, the combined company would be well-positioned to enhance growth by providing cross-selling opportunities of complementary product offerings to its expanded customer base.”
