Canadian Electrical Wholesaler

December 27, 2019

An interesting series of events between December 23 and 24 has WESCO offering $4 per share more than private equity group Clayton, Dubilier & Rice for the opportunity to buy Anixter International (all figures in US$). As reported on October 30, Anixter agreed to a deal to go private with CD&R with a $3.8 billion buyout deal.

On Monday, December 23, Anixter announced CD&R had raised its acquisition price from $82.50 a share to $86 a share, making the deal worth about $3.9 billion. Part of that announcement said, “The holders of contingent value rights would be entitled to receive an additional $2.50 in cash per share if CD&R, or any fund managed by CD&R, enters into a definitive agreement, within one year after the closing of the Anixter acquisition, to acquire WESCO International, Inc., or to sell Anixter to WESCO, which amount would be payable only upon completion of such acquisition or sale.”

WESCO responded to the December 23 announcement with one of its own on December 24, stating that it will offer $90 a share to acquire Anixter.

GLENVIEW, Ill.— As previously announced, on October 30, 2019, Anixter International Inc., a leading global distributor of Network & Security Solutions, Electrical & Electronic Solutions and Utility Power Solutions, entered into an Agreement and Plan of Merger, as amended on November 21, 2019 (the “Original Merger Agreement”) to be acquired by a fund sponsored by Clayton, Dubilier & Rice, LLC (“CD&R”) in an all cash transaction valued at approximately $3.9 billion.

Anixter today announced that Anixter and CD&R agreed to an Amended and Restated Merger Agreement (the “Amended Merger Agreement”) to increase the per-share consideration payable to Anixter’s shareholders to $86.00 per share in cash (from $82.50 per share in cash) and a $2.50 contingent value right as described below. The Amended Merger Agreement amends and restates in its entirety the Original Merger Agreement.

The revised per-share consideration represents a premium of approximately 20% over Anixter’s closing price on October 29, 2019, and a premium of approximately 35% over the 90-day volume-weighted average price of Anixter’s common stock for the period ended October 29, 2019. The transaction is now valued at approximately $4 billion.

Under the terms of the Amended Merger Agreement, Anixter’s shareholders will receive, in addition to $86.00 in cash, a $2.50 contingent value right. The holders of contingent value rights would be entitled to receive an additional $2.50 in cash per share if CD&R, or any fund managed by CD&R, enters into a definitive agreement, within one year after the closing of the Anixter acquisition, to acquire WESCO International, Inc. (“WESCO”), or to sell Anixter to WESCO, which amount would be payable only upon completion of such acquisition or sale. We have been advised by CD&R that it has made a fully financed proposal to WESCO to acquire all of the outstanding shares of WESCO and that the Board of Directors of WESCO has determined that the proposal does not form a basis for discussions at this time.

“On behalf of Anixter’s Board of Directors, we are pleased to accept the amended acquisition proposal from CD&R and have concluded that it is in the best interest of Anixter’s stockholders,” said Sam Zell, Chairman of the Anixter Board of Directors. “In evaluating the proposal, the Board has considered other alternatives and has run a thorough process focused on ensuring that our stockholders receive superior value with maximum certainty of successful timely completion. This is the right outcome for Anixter and its stockholders.”

The transaction is subject to the approval of Anixter’s stockholders and other customary closing conditions. The required antitrust waiting periods have expired, or approvals or clearances have otherwise been obtained, in the United States, Canada, Mexico and Costa Rica. The transaction remains conditioned on approvals or clearances in the European Union, Russia and Turkey. The transaction is expected to be completed in early February 2020, subject to approval by the Anixter stockholders and other customary closing conditions.

Under the terms of the Amended Merger Agreement, Anixter may, subject to the provisions of the Amended Merger Agreement, respond to an unsolicited proposal that is reasonably likely to result in a superior proposal. Anixter does not intend to disclose developments with respect to any such unsolicited proposal unless and until it determines it is appropriate to do so. In addition, Anixter may continue to engage in discussions with an Excluded Party (as defined in the Amended Merger Agreement).

Anixter intends to file with the U.S. Securities and Exchange Commission on December 26, 2019 a Current Report on Form 8-K regarding Anixter’s entry into the Amended Merger Agreement.

Centerview Partners LLC is serving as lead financial advisor, Wells Fargo Securities, LLC is also serving as financial advisor and Sidley Austin LLP is serving as legal advisor to Anixter in connection with the transaction. BofA Securities, J.P. Morgan Securities LLC, Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC and Credit Suisse are serving as financial advisors to CD&R, and Debevoise & Plimpton LLP is serving as legal advisor to CD&R. Here is the WESCO press release on December 24:

PITTSBURGH, Dec. 24, 2019 — WESCO International, Inc., a leading provider of electrical, industrial, and communications MRO and OEM products, construction materials, and advanced supply chain management and logistics services, confirms that it is seeking to acquire Anixter International, and has most recently made an offer valued at US$90 per Anixter share.

Mr. John J. Engel, WESCO’s Chairman, President and CEO, commented, “Our proposal to acquire Anixter represents a compelling opportunity to deliver significant and immediate value to Anixter’s stockholders, and to afford Anixter stockholders the ability to participate in the long-term growth and value creation of the combined company. Given the substantial expected synergies and an enhanced strategic profile for the combined company, we believe that WESCO’s acquisition of Anixter is in the best interests of both companies and their stockholders. This transaction would deliver significant and superior value to our respective stockholders. We are currently determining next steps to effect a transaction and expect to have further comment on these matters shortly.”


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