Anixter International Inc. announces that the Anixter Board of Directors (the ‘Anixter Board’) determined that an offer from WESCO International, Inc. (‘WESCO’) constitutes a ‘Superior Company Proposal’ as defined in Anixter’s previously announced definitive agreement and plan of merger with an affiliate of Clayton, Dubilier & Rice, LLC (‘CD&R’). Under the terms of WESCO’s revised offer, WESCO would acquire Anixter for nominal consideration of $100.00 per share, reflecting an enterprise value of approximately $4.5 billion including net debt. The proposed consideration consists of $70.00 per share in cash, 0.2397 shares of WESCO common stock, and $15.89 per share in face amount of WESCO perpetual preferred stock. Common stock consideration Based on the closing price on January 8, 2020, the total consideration would be $100.16 The cash portion of the merger consideration will be increased by up to $2.82 to the extent the value of the WESCO common stock consideration, calculated using a volume weighted average before closing, declines below $14.11 per share, providing Anixter stockholders with 20% down-side protection based on WESCO’s closing price on January 2, 2020. Anixter stockholders would receive the benefit of any increase in the value of the WESCO common stock consideration above $14.11 per share. Based on the closing price on January 8, 2020, the total consideration would be $100.16. WESCO has told Anixter that the perpetual preferred stock is expected to be listed on the New York Stock Exchange, will be non-callable for five years and will pay dividends at a fixed rate subject to reset every five years. Careful review and consideration WESCO has also informed the Company that the proposed acquisition of Anixter will not require the approval of WESCO’s stockholders. “After careful review and consideration and consultation with our financial and legal advisers, the Board of Anixter has determined that the current WESCO offer is superior to the existing CD&R agreement,” said Sam Zell, chairman of Anixter. CD&R has the option for the next five business days to negotiate Anixter has notified CD&R of the Anixter Board’s determination and, pursuant to the CD&R Merger Agreement, CD&R has the option for the next five business days to negotiate an amendment of that agreement so that WESCO’s offer will no longer be a ‘Superior Company Proposal.’ Paying the termination fee Under the CD&R Merger Agreement, Anixter is required to pay a $100 million termination fee to CD&R if the Anixter Board terminates the CD&R Merger Agreement in order to enter into an agreement with WESCO. WESCO has agreed to pay the termination fee on Anixter’s behalf in such event. At this time, Anixter remains subject to the CD&R Merger Agreement and the Anixter Board has not changed its recommendation in support of the CD&R transaction or the existing CD&R Merger Agreement, or its recommendation that Anixter’s stockholders adopt the CD&R Merger Agreement. There can be no assurances that a transaction with WESCO will result from WESCO’s offer, or that any other transaction will be consummated. There can be no assurance that CD&R will seek to negotiate with Anixter or will make a revised offer.
Anixter International Inc., a distributor of network & security solutions, electrical & electronic solutions and utility power solutions, enters into a definitive agreement with an affiliate of Clayton, Dubilier & Rice (‘CD&R’) to be acquired in an all cash transaction valued at approximately $3.8 billion. The transaction will result in Anixter becoming a private company and is expected to close by the end of the first quarter of 2020. Under the terms of the merger agreement, CD&R-managed funds will acquire all of the outstanding shares of Anixter common stock for $81.00 per share in cash. Helping industrial distributors As a private company, we believe Anixter will have greater flexibility to focus on" This represents a premium of approximately 13% over Anixter’s closing price on October 29, 2019, and a premium of approximately 27% over the 90-day volume-weighted average price of Anixter’s common stock for the period ended October 29, 2019. “We believe this transaction is in the best interest of Anixter and our stockholders,” said Bill Galvin, Anixter’s President and Chief Executive Officer. “After careful and thorough analysis, together with our independent advisors, our Board of Directors unanimously approved this transaction with CD&R, which has a strong reputation and a track record of success in helping industrial distributors, like Anixter, prosper and grow. We are also pleased that this transaction appropriately recognises the value of Anixter’s customer relationships, technology and solutions, financial management and global market position. It’s a great outcome for Anixter’s employees, customers and partners. As a private company, we believe Anixter will have greater flexibility to focus on and accelerate our long-term strategic priorities.” Outstanding management team Nate Sleeper, Partner at CD&R, said, “Anixter is an exceptionally well-positioned industrial distributor with leading market positions and differentiated capabilities that deliver strong customer value. We look forward to partnering with the outstanding management team, led by Bill Galvin, on initiatives to grow the business and further strengthen its competitive position while maintaining Anixter’s distinctive culture grounded in operational excellence, innovation, and an unwavering commitment to the company’s employees, customers, and global partners.” Anixter expects to hold a Special Meeting of Stockholders to consider and vote on the proposed merger It is anticipated that upon completion of the transaction, Bill Galvin, along with other members of Anixter’s executive management team, will continue to lead the company. Anixter’s Board of Directors has unanimously approved the agreement with CD&R and recommends that Anixter stockholders approve the proposed merger and merger agreement. Anixter expects to hold a Special Meeting of Stockholders to consider and vote on the proposed merger and merger agreement as soon as practicable after the mailing of the proxy statement to its stockholders. Fully committed financing The transaction is subject to the approval of Anixter’s stockholders, regulatory approvals and other customary closing conditions. The transaction has fully committed financing and is not subject to any condition with regard to the financing. Equity financing will be provided by Clayton, Dubilier & Rice Fund X, L.P., an approximately $10 billion pool of equity capital managed by CD&R; committed debt financing has been obtained from Bank of America, J.P. Morgan, Deutsche Bank Securities Inc. and Credit Suisse. Certain stockholders of Anixter, including entities associated with Sam Zell, Chairman of the Anixter Board, which own approximately 9% of the outstanding shares of Anixter common stock, have entered into a voting agreement with CD&R, pursuant to which they have agreed, among other things, to vote their shares of Anixter common stock in favour of the merger. Provisions of the merger agreement Under the terms of the merger agreement, Anixter may solicit superior proposals from third parties for a period of 40 calendar days continuing through December 9, 2019. In accordance with the merger agreement, Anixter’s Board of Directors, with the assistance of its advisors, intends to solicit superior proposals during this period. Anixter would be obligated to pay a $45 million break-up fee to CD&R In addition, Anixter may, at any time, subject to the provisions of the merger agreement, respond to unsolicited proposals that are reasonably likely to result in a superior proposal. Anixter advises that there can be no assurance that the solicitation process will result in an alternative transaction. To the extent that a superior proposal received prior to December 9, 2019 or, in certain circumstances, 10 days thereafter leads to the execution of a definitive agreement, Anixter would be obligated to pay a $45 million break-up fee to CD&R. Financial advisors for the solicitation process Anixter does not intend to disclose developments with respect to this solicitation process unless and until it determines it is appropriate to do so. 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. and Credit Suisse are serving as financial advisors to CD&R, and Debevoise & Plimpton LLP is serving as legal advisor to CD&R.
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