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Anixter Acquisition Gives WESCO Commanding Positions in VDV & Utility Markets

Jan. 24, 2020

The Jan. 13 announcement that WESCO International, Pittsburgh, PA, had acquired Anixter International, Glenview, IL, in a transaction valued at approximately $4.5 billion, makes WESCO the largest distributor of electrical supplies in North America and adds significant scale to its voice-data-video (VDV) and utility offerings.

Anixter has always been a big-time player in the VDV market, and it became the biggest player in the utility market with its 2015 acquisition of HD Supply Power Solutions, which back then reportedly had utility sales of more than $1 billion. WESCO was always a big player in the utility market, as this niche accounts for 16% of its $8.176 million in net sales, according to WESCO’s 2018 annual report. That’s a much higher percentage than industry norms, as according to EM market data, the utility market typically accounts for 3.8% of annual sales through electrical distributors. With the Anixter acquisition, WESCO’s utility sales will be well over an estimated $2.3 billion.

The press release announcing the acquisition also said the deal will transform WESCO in the following ways:

Enhances scale and global position. The combined company will have pro forma 2019 estimated revenues of approximately $17 billion. “With an extensive global reach and increased international exposure, approximately 12% of revenues will be generated outside of North America,” the release said. “The increased scale will enable the combined company to accelerate digitization strategies and provide a platform for growth in attractive emerging markets.”

Broadens and diversifies product and services portfolio. The press release said, “The combined company will have a comprehensive and balanced portfolio that unites WESCO’s capabilities in industrial, construction, and utility with Anixter’s expertise in data communications, security and wire and cable. Bringing together the companies’ complementary products, services, technologies and solutions is expected to create significant cross-selling opportunities, strengthening the combined company’s customer value proposition and supplier relationships.”

Delivers substantial synergies. WESCO expects to realize annualized run-rate cost synergies of over $200 million by the end of year three through efficiencies in corporate and regional overhead, including duplicative public company costs, branch and distribution center optimization, and productivity in procurement, field operations, and supply chain.

Comments in the press release by John Engel, WESCO’s chairman, president, and CEO, focused on the enhanced service offerings, operational efficiencies and stockholder value the acquisition will offer. “The transformational combination of WESCO and Anixter will create a premier electrical and data communications distribution and supply chain services company,” he said in the release. “With increased scale and complementary capabilities, we will be positioned to digitize our business, expand our services portfolio and supply chain offerings, and deliver solutions to our customers whenever and wherever they need them around the globe.

“Given the enhanced strategic profile and competitiveness of the combined company, we will deliver improved growth and earnings, and exceptional cash flow generation. We look forward to welcoming Anixter’s associates to the WESCO team as we embark on this next chapter and create substantial value for our stockholders, customers, suppliers, and people.”