Anixter International Inc. Announces the Acquisition of the Power Solutions Segment of HD Supply
July 15 2015 - 4:30PM
Business Wire
- Transforms Anixter into a leading North
American electrical distribution platform
- Significantly expands electrical and
utility product portfolio and customer relationships
- Expected to be accretive to EPS in the
first year post-closing
Anixter International Inc. (NYSE: AXE) today announced that it
has entered into a definitive agreement to acquire the Power
Solutions segment of HD Supply for $825 million, subject to
customary post-closing working capital and other adjustments. The
acquisition, which is the largest in Anixter’s history, is expected
to be accretive to earnings in the first full year of operation,
exclusive of transaction, one-time integration expenses and
incremental amortization of intangible assets. The acquisition is
expected to result in future tax benefits from acquired U.S.
intangible assets with a net present value estimated to be
approximately $70 million.
Headquartered in Atlanta, Power Solutions distributes over
200,000 utility, electrical and industrial MRO products to
approximately 13,000 customers including investor-owned utilities,
public power utilities, electrical contractors and industrial
businesses. Operating from a broad geographic footprint of
approximately 130 branches in 30 U.S. states and 4 Canadian
provinces, Power Solutions reported fiscal 2014 revenue of $1.9
billion and adjusted EBITDA of $79 million.
“Power Solutions is a compelling strategic acquisition for
Anixter. Consistent with our message that we are sharpening our
focus, this transaction will significantly enhance our competitive
position in the electrical wire and cable business and further
strengthen our customer and supplier value proposition. In addition
to transforming our existing utility business into a leading North
American distributor to the utility sector, this acquisition will
enable us to provide a full line electrical solution to our
existing customers and will provide us with broader access to the
mid-size electrical construction market,” said Bob Eck, President
and Chief Executive Officer of Anixter. “Like Anixter, Power
Solutions has built their business on providing complex supply
chain services and value added distribution to their customers. We
look forward to the talented Power Solutions team joining the
Anixter family when the transaction closes. Together, we will offer
broader solutions to our respective customers and substantial
long-term growth and value creation for all Anixter
stakeholders.”
John Tisera, President of Power Solutions, stated, “We are
excited to have access to Anixter’s broad portfolio of products,
services and technical expertise which will allow us to further
expand our customer offerings. The strategic rationale of this
combination is strengthened by our shared culture of partnering
with both our customers and world-class suppliers to bring value to
their businesses.”
“This acquisition combined with the September 2014 acquisition
of Tri-Ed and the June 2015 sale of our OEM – Supply Fasteners
segment completes a transformation of our global platform and
results in a portfolio that is well-positioned for substantial and
sustainable long term growth,” said Ted Dosch, Executive Vice
President and Chief Financial Officer. “With our attention now
focused on the successful integration of these businesses and
maximizing their synergistic value, we expect to generate
significant free cash flow to support our balanced capital
allocation strategy, including a return to our long term target of
45-50 percent debt-to-total capital ratio within the short to
medium term.”
Subject to regulatory approval and certain customary closing
conditions, this transaction is expected to close near the end of
the third quarter of 2015 and will be financed using available cash
and additional borrowings. We expect to have full commitment on
financing in place prior to closing. The majority of transaction
and integration costs will be incurred in fiscal years 2015 and
2016. Additional financial details will be provided in our second
quarter 2015 earnings release on July 28, 2015.
Greenhill & Co., LLC served as financial advisor, Skadden,
Arps, Meagher & Flom LLP served as legal counsel, and KPMG LLP
served as accounting advisor to Anixter on the transaction.
Conference Call
We will host a conference call Thursday, July 16 at 8:30 a.m. CT
(9:30 a.m. ET) to discuss the acquisition. The dial in number is
800-768-6570, passcode 816 7628; and the live audio webcast can be
accessed at Anixter.com/investor.
About Anixter
Anixter International is a leading global distributor of
enterprise cabling & security solutions and electrical and
electronic wire & cable. The company adds value to the
distribution process by providing its customers access to 1)
innovative inventory management programs 2) approximately 400,000
products and $800 million in inventory 3) approximately 220
warehouses/branch locations with 5.5 million square feet of space
and 4) locations in over 250 cities in more than 50 countries.
Founded in 1957 and headquartered near Chicago, Anixter trades on
the New York Stock Exchange under the symbol AXE.
About HD Supply
HD Supply (www.hdsupply.com) is one of the largest industrial
distributors in North America. The company provides a broad range
of products and value-add services to approximately 500,000
customers with leadership positions in maintenance, repair and
operations, infrastructure and power and specialty construction
sectors. Through approximately 650 locations across 48 states and
seven Canadian provinces, the company's approximately 15,000
associates provide localized, customer-driven services including
jobsite delivery, will call or direct-ship options, diversified
logistics and innovative solutions that contribute to its
customers' success.
Safe Harbor Statement
Statements in this press release regarding the proposed
transaction, the expected timetable for completing the transaction,
and any other statements about our managements’ future
expectations, beliefs, goals, plans or prospects constitute forward
looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Any statements that are not
statements of historical fact should also be considered to be
forward looking statements. There are a number of important factors
that could cause actual events to differ materially from those
indicated by such forward looking statements, including: the
ability to consummate the transaction; the risk that regulatory
approvals required for the contemplated transaction are not
obtained or are obtained subject to conditions that are not
anticipated; the risk that the financing required to fund the
transaction is not obtained; the risk that the other conditions to
the closing of the transaction are not satisfied; potential adverse
reactions or changes to business or employee relationships,
including those resulting from the announcement or completion of
the transaction; uncertainties as to the timing of the closing; any
changes in general economic and/or industry specific conditions;
and the other factors described in our Annual Report on Form 10-K
for the year ended January 2, 2015 and our most recent Quarterly
Reports on Form 10-Q each filed with the Securities and Exchange
Commission. We expressly disclaim any intention or obligation to
update any forward looking statements as a result of developments
occurring after the date of this press release.
Non-GAAP Financial Measures
This release includes certain financial measures computed using
non-GAAP components as defined by the SEC. Non-GAAP financial
measures provide insight into selected financial information and
should be evaluated in the context in which they are presented.
These non-GAAP financial measures have limitations as analytical
tools, and should not be considered in isolation from, or as a
substitute for, financial information presented in compliance with
GAAP. Non-GAAP financial measures may not be comparable to
similarly titled amounts reported by other companies. Management
does not use these non-GAAP financial measures for any purpose
other than the reasons stated above.
EBITDA is defined as net income from continuing operations
before interest, income taxes, depreciation and amortization.
Adjusted EBITDA is defined as EBITDA before foreign exchange and
other non-operating expense and non-cash stock-based compensation,
excluding the other special items from reported financial results,
as defined above. Adjusted EBITDA is presented because we believe
it is a useful indicator of our performance and our ability to meet
debt service requirements. It is not, however, intended as an
alternative measure of operating results or cash flow from
operations as determined in accordance with generally accepted
accounting principles.
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Anixter ContactsFor
Investors:Ted DoschEVP - Finance and CFO224.521.4281orLisa
Micou Meers, CFAVice President – Investor
Relations224.521.8895orFor Media:Dawn MarksVice President –
Communications224.521.8484
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