Who will acquire and own Anixter International -- the network and security solutions distributor? The answer involves a high-stakes bidding war between private equity firm Clayton, Dubilier and Rice LLC (CD&R), and global distributor Wesco International.
Indeed, CD&R and Wesco are locked in a bidding war to acquire Anixter, a Glenview, Illinois-based distributor that generated $2.2 billion in sales during its third quarter ended September 27, 2019. The back-and-forth surfaced in October 2019 and has stretched on into January 2020. As a result, the buyout price tag has grown from $3.8 billion to roughly $4.5 billion.
Related: M&A Deal List -- Tech Buyouts of 2020.
CD&R vs Wesco: Anixter Bidding War Timeline
The bidding war timeline looks like this:
- October 30, 2019 -- The $3.8 billion deal: Anixter discloses company sale to CD&R for $81 per share in cash. But the deal includes a 40-day "go shop" period that allows Anixter to solicit better offers for the business. The door is open for rival suitors.
- November 22, 2019 -- The $3.9 billion deal: Anixter discloses revised sale to CD&R, this time at $82.50 per share. The revised deal allows Anixter to seek superior offers through November 24, 2019.
- December 23, 2019 -- The $4.0 billion deal: Anixter discloses another revised sale to CD&R, this time at $86.50 per share and a $2.50 contingent value right.
- December 26, 2019: Wesco International surfaces with a $93.50 per share offer in cash and stock for Anixter. In response, Anixter vows to review the offer.
- January 2, 2020: -- The $4.3 billion deal: Anixter announces revised deal with CD&R -- this time at $93.50 per share.
- January 3, 2020 -- The $4.5 billion deal: Wesco International ups the bid for Anixter to $97.00 per share in cash and stock. Again, Anixter vows to review the offer.
- January 9, 2020: Anixter says Wesco's latest offer -- at $4.5 billion -- is superior to the CD&R deal.
CD&R has the option for the next five business days to raise its bid for Anixter, the distributor has informed the private equity firm. Will CD&R up its offer and counter Wesco yet again? We'll be listening and watching.
CD&R vs. Wesco: Who Are the Anixter Bidders?
The bidders for Anixter come from vastly different backgrounds, but both have strong track records in their respective markets -- specifically, private equity and distribution.
CD&R, based in New York, is a private equity firm launched in 1978. The firm is well-known for helping IBM to spin off the Lexmark printer business in 1991. CD&R has held ownership stakes in such firms as The Hertz car rental business, and Kinko's (now FedEx Office). CD&R's executive team has a long track record in the private equity market. Recent moves include promoting Nate Sleeper to CEO, and David Novak and Rick Schnall to co-presidents, effective January 1, 2020. Sleeper has been with the private equity firm for roughly 20 years.
Wesco is a Fortune 500 distributor based in Pittsburgh, Pennsylvania. Revenues were $8.2 billion in 2018. The company specializes in electrical, industrial, and communications maintenance, repair and operating (MRO) and original equipment manufacturer (OEM) products, construction materials, and advanced supply chain management and logistic services. Wesco has roughly 9,300 people employees, 30,000 supplier partners, and 70,000 active customers. The company operates 11 distribution centers and approximately 500 branches in North America and international locations, Wesco says.
Distributor Mergers and Acquisitions: Deals and Companies to Watch
M&A activity in the IT distribution market has been steady, and multiple bidders occasionally emerge to push up buyout prices.
Among the reasons:,Private equity investors are sitting on a record $1.5 trillion in cash as of early 2020, according to Preqin. Yes, that’s trillion — with a T. That is the highest on record and more than double what it was five years ago, CNBC reports. Amid that reality, private equity firms are scrambling to make investments.
Recent deals include Apollo Global Management's $6 billion buyout of Tech Data, which is expected to close in the first half of 2020. Warren Buffett's Berkshire Hathaway also bid for Tech Data, which forced Apollo to sweeten the offer for the distributor.
Additional distributors may be up for sale. Among the potential targets private equity firms have been watching: HNA Group’s Ingram Micro. Although Ingram Micro’s business has been strong, parent HNA Group has been seeking to sell some assets to strengthen its balance sheet, multiple reports suggested throughout 2019.
Blog originally published January 7. Updated January 9.
