WESCO International Inc. and Anixter International Inc. announced on January 13 their boards of directors have unanimously approved a merger agreement under which WESCO will acquire Anixter in a transaction valued at approximately $4.5 billion. Anixter’s prior agreement to be acquired by Clayton, Dubilier & Rice LLC was terminated after CD&R waived its right to match WESCO’s $100-per-share offer for Anixter.
Under the terms of the WESCO-Anixter agreement, each share of Anixter common stock will be converted into the right to receive $70 in cash, 0.2397 shares of WESCO common stock, and preferred stock consideration valued at $15.89. Based on the transaction’s structure, the companies expect that WESCO stockholders will hold 84% of the combined company and Anixter stockholders will hold 16% of it.
The acquisition is subject to Anixter stockholder approval and other customary requirements. The companies said they expect the transaction will be completed in the second or third quarter of 2020.
An announcement by both companies also stated that the combined company will have pro-forma 2019E revenues of approximately $17 billion. Approximately 12% of those revenues will be generated outside North America.
“The combined company will have a comprehensive and balanced portfolio that unites WESCO’s capabilities in industrial, construction, and utility with Anixter’s expertise in data communications, security, and wire and cable,” the companies said. “Bringing together the companies’ complementary products, services, technologies, and solutions is expected to create significant cross-selling opportunities, strengthening the combined company’s customer-value proposition and supplier relationships.”
WESCO said it “expects to realize annualized run-rate cost synergies of over $200 million by the end of year three through efficiencies in corporate and regional overhead, including duplicative public company costs, branch and distribution-center optimization, and productivity in procurement, field operations, and supply chain. In addition, WESCO, expects incremental sales-growth opportunities to result by cross-selling the companies’ complementary product and services offerings to an expanded customer base and capitalizing on the enhanced capabilities across both networks.”
WESCO’s chairman, president and chief executive officer, John J. Engel, commented, “The transformational combination of WESCO and Anixter will create a premier electrical and data communications distribution and supply-chain services company. 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.”
Sam Zell, chairman of Anixter’s board of directors, added, “Today’s announcement is the culmination of a comprehensive process that showed, from the start, what a strong business the team at Anixter has built. The agreement with WESCO is a great result for our stockholders, who will receive significant near-term value and stand to benefit from the combined company’s growth and prospects.”
Anixter’s president and chief executive officer Bill Galvin said, “This is the result of a very thorough process to determine the value of our company. 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.”