WESCO International, Inc., a provider of business-to-business (B2B) distribution, logistics services and supply chain solutions, announced it has completed its merger with Anixter International Inc., creating a premier, global B2B distribution and supply chain solutions company.
Upon completion of the merger, Anixter became a wholly owned subsidiary of WESCO International. Anixter’s shares ceased trading prior to the market open on June 22, 2020, and each share of Anixter common stock has been converted in the merger into the right to receive $72.82 in cash (without interest), 0.2397 shares of WESCO common stock, and preferred stock consideration consisting of 0.6356 depositary shares, each whole share representing a fractional interest in WESCO’s newly created 10.625% Series A Fixed-Rate Reset Cumulative Perpetual Preferred Stock.
Depositary shares of underlying preferred stock
Based on the 10-day volume weighted average price of WESCO common stock on the NYSE as of the end of trading on June 17, 2020, and valuing the depositary shares based on the value of the underlying preferred stock, total consideration per share of Anixter common stock was $97.93. The newly issued shares of WESCO common and depositary shares will commence trading on the New York Stock Exchange, June 22, 2020, with the depositary shares trading under ticker symbol WCC PR A.
As we bring together our complementary products, services, and technologies, there are significant cross-selling opportunities"
John Engel, Chairman, President, and Chief Executive Officer, said, “Today marks a significant milestone for WESCO and Anixter. In combining two industry leaders with successful track records, we are creating the premier electrical, communications and utility distribution and supply chain solutions company in the world. This is a transformational combination that provides substantial value creation for our customers, supplier partners, employees, investors, and the communities in which we operate."
"WESCO's capabilities in industrial, construction, and utility matched with Anixter's expertise in communications, security, and wire and cable create an industry-leading line-up for our customers. As we bring together our complementary products, services, and technologies, there are significant cross-selling opportunities that enable us to offer more solutions, to more customers, in more locations around the world. This is a growth play which will capitalize on the accelerating secular trends of electrification, increased bandwidth demand driven by higher voice, data, video and mobile usage, and the combination and digitization of our B2B value chain.”
WESCO and Anixter team cultural alignment
“I would like to welcome all WESCO and Anixter team members to our new combined company and thank them for their outstanding dedication and service. We have been executing a detailed, rigorous and process-oriented integration planning effort over the past few months. The high degree of collaboration among and across the integration teams has been inspiring and underscores the strong cultural alignment between WESCO and Anixter."
"We are taking advantage of the opportunity to leverage the best talent and ideas of two successful organizations in forming our new, world class enterprise. Our recently announced senior management team is excited and confident we will deliver our committed synergies, above-market growth, and industry-leading margins and returns. I look forward to reporting on our progress and the success of this transformational combination in the months ahead.”
Compelling Strategic and Financial Rationale
- Enhances Scale and Global Position
The combined company generated pro forma 2019 revenue of more than $17 billion and is an electrical and data communications distributor in North America. The increased scale enables the combined company to accelerate digitization strategies and provides a platform for growth in attractive international markets.
- Diversifies Product and Services Portfolio
The combined company has 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. Bringing together the companies’ complementary products, services, technologies, and solutions creates significant cross-selling opportunities, strengthening the customer value proposition as well as supplier relationships.
Complementary product and services
- Delivers Substantial Synergies
WESCO 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, optimization of the branch and distribution center network, and productivity in field operations and the 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.
Cash Flow Generation and De-Lever
- Significant Free Cash Flow Generation
The combination is expected to be accretive to WESCO's earnings in the first full year of ownership and, with the realization of synergies, substantially accretive thereafter. WESCO also expects the transaction to generate significant margin expansion and EPS growth. The combined company offers strong free cash flow generation, supporting continued investments in the business and enabling a return of capital to stockholders in the future.
- Ability to Rapidly De-Lever
WESCO will utilize the strength of the combined company's cash flows, including significant synergies, to reduce its leverage quickly and expects to be within its long-term target leverage range of 2.0x to 3.5x within 36 months.
Financial and legal Advisors
Barclays served as financial advisor to WESCO, and Wachtell, Lipton, Rosen & Katz served as legal advisor. Centerview Partners LLC served as lead financial advisor and Wells Fargo Securities, LLC also served as financial advisor to Anixter, and Sidley Austin LLP served as legal advisor.