In a transaction that would combine the national resources of two of the industry’s largest master distributors of wire and cable, OmniCable, West Chester, PA, announced plans to buy Houston Wire & Cable Co. (HWCC), Houston.
According to the press release, OmniCable will acquire all outstanding shares of HWCC common stock for $5.30 per share in an all-cash transaction valued at $91 million. The price represents a premium of +39% to HWCC’s unaffected closing price of $3.80 on March 24, 2021, and an +89% premium to the $2.81 average closing price for the preceding 12-month period.
“The combined company results in a national wire and cable redistribution company that will maximize OmniCable’s and HWCC’s complementary businesses, products and national footprint to better meet the needs of both companies’ customers,” the press release said. “The combined company also will continue HWCC’s fastener redistribution business (Vertex). Following the close of the transaction, each company will retain its own brands and its existing locations.”
“The HWCC team shares our passion for customer service,” said Jeff Siegfried, OmniCable’s vice chairman, in the release. “Our shared central focus on redistribution, logistical expertise and unyielding pursuit of perfection for our business partners will drive both businesses to enhance the value that we bring to the marketplace. We look forward to continued growth and the shared learning we know will come from this new relationship.”
OmniCable was acquired by Dot Holdings Co. in 2019, Dot is owned by Dot Family Holdings, owners and operators of Dot Foods, Inc., the largest food industry redistributor in North America, and OmniCable operates as a subsidiary of that company. OmniCable was founded by Barry Siegfried and Ron Slepin as a master distributor of wire and cable in 1977, and they along with Barry’s son, Jeff, and the rest of the OmniCable team, spent years positioning Omni Cable as a dependable source of wire and cable for electrical distributors that adheres to a strict distributor-only sales policy. It has stocking locations in Philadelphia; Atlanta; Boston; Charlotte, NC; Chicago; Denver; Houston; Los Angeles; San Francisco; Seattle; St. Louis; Tampa, FL; Cincinnati; and Toronto, ON.
HWCC was founded by Terry Hunt in 1975. At the time, the concept of a master distributor of wire and cable was new to the electrical market, and Hunt spent years convincing full-line electrical distributors that his intentions were to sell only through distributors, and not around them and directly to contractors, industrials and other end users. Today, HWCC has locations in Houston and Odessa, TX; Atlanta; Baton Rouge, LA; Charlotte, NC; Chicago; Los Angeles; Philadelphia; San Francisco, Seattle; and Tampa, FL.
William Blair & Co. and Johnson Rice & Co. are serving as financial advisors to HWCC, and Schiff Hardin LLP is serving as legal counsel. Lewis Rice LLP is serving as legal counsel to OmniCable.
James Pokluda III, HWCC’s president & CEO, said in the press release, “HWCC, Vertex and OmniCable are highly respected suppliers in their respective markets serving electrical and industrial distributors throughout the U.S. and Canada. This merger creates an outstanding combination of leading businesses that will be well positioned to provide increased value and customer service to its redistributor partners.”
The agreement includes a 30-day “go-shop” period expiring on April 24, 2021, which permits HWCC’s board of directors and advisors to solicit alternative acquisition proposals from third parties.
HWCC will have the right to terminate the merger agreement to enter into a superior proposal subject to the terms and conditions of the merger agreement. The release said there can be no assurance that this “go-shop” will result in a superior proposal, and the transaction is expected to close following HWCC’s annual meeting of stockholders scheduled for May 25.