Anixter International announced plans early Monday to be acquired by Wesco International for $4.5 billion, creating an electrical and data communications distribution company with $17 billion in annual revenues.
The merger agreement, approved by the boards of both companies, ends a bidding war with an affiliate of private equity firm Clayton, Dubilier & Rice, which first proposed buying Glenview, Ill.-based Anixter for $3.8 billion in October.
"It was a very exciting ride with a lot of twists and turns," John Engel, Wesco chairman, president and CEO, told analysts on a conference call Monday.
Anixter has about 9,000 employees, including 950 in two buildings in Glenview. Combining with Wesco will create the largest North American company in the industry, with a market share of 13%, but the field remains highly fragmented.
The cash-and-stock agreement with Pittsburgh-based Wesco needs the approval of shareholders and regulators, and is anticipated to close in the second or third quarter, the companies said.
Under terms of the deal, for each share of Anixter stock, shareholders will receive $70 in cash, 0.2397 share of Wesco common stock and preferred stock consideration valued at $15.89, based on the value of its liquidation preference. Altogether, the total consideration adds up to about $100 per Anixter share, the companies said.
After the deal closes, Wesco shareholders will own 84% of the combined company and Anixter shareholders 16%.
In October, Anixter announced plans to be acquired by a Clayton affiliate for $3.8 billion. However, the merger agreement allowed Anixter's board to solicit a better merger proposal from someone else through Dec. 9, and the board said it planned to do so. A bidding war with Wesco ensued.
Clayton waived its right to match Wesco's offer, Anixter and Wesco said Monday.
Wesco said it expects to realize $200 million in cost savings by the third year, as it consolidates operations and streamlines its branch footprint. It is unknown what the consolidation will mean for Anixter's executive team and other employees and its presence in Glenview.