Just one day after Anixter announced that it had accepted a second amended merger agreement with private equity firm Clayton, Dubilier & Rice (CD&R) that would pay its shareholders $93.50 per share in cash, rival distributor WESCO on Friday said that is revising its offer to acquire Anixter for $97 per share in cash in stock.
Under the proposal, WESCO would pay Anixter shareholders $63.00 cash per share, plus a fixed exchange ratio of 0.2397 shares of WESCO common stock, as in WESCO's prior proposal, plus $19.89 of a newly created class of WESCO perpetual preferred stock. In addition, WESCO said that Anixter stockholders would participate in all the value upside in the WESCO common stock. The common stock consideration would be subject to downside protection, such that if the average market value of WESCO common stock prior to closing is between $47.10 per share and $58.88 per share, then the cash consideration paid at closing would be increased by up to $2.82 per share to ensure that the total consideration remains at $97.00 per Anixter share.
"WESCO is uniquely positioned to deliver immediate value to Anixter stockholders and provide the ability to participate in the significant upside potential of a combined organization,” John J. Engel, WESCO's Chairman, President and CEO, said in a statement. “Together, we would create a premier electrical and data communications distribution company, with an enhanced strategic profile and competitiveness, generating significant expected synergies and earnings accretion. We continue to strongly believe this transformative combination is in the best interests of both companies' stockholders and that our latest proposal represents a superior company proposal compared to Anixter's current agreement with CD&R."
This marks the third official offer that WESCO has made to acquire Anixter in less than a month. Following the initial $3.8 billion deal that Anixter entered into with CD&R in late October, the company announced via internal communications in early December that another bidder had emerged and that discussions with the unnamed suitor were ongoing.
On Dec. 24, WESCO confirmed that it was indeed seeking to buy Anixter and was offering a deal valued at $90 per share. WESCO sweetened the deal just two days later, upping its offer to $93.50 per share in cash and stock. That deal was subsequently countered by CD&R in the second amended merger agreement that was accepted by Anixter on Thursday.