Anixter International has entered into an agreement to be acquired by Clayton, Dubilier & Rice (CD&R) in an all-cash transaction valued at $3.8 billion. The valuation multiple for this transaction is in excess of 9x Anixter’s trailing EBITDA.
Anixter International (NYSE: AXE) is a distributor of communication products, electrical and electronic wire and cable, OEM fasteners and other small parts. The company has more than 300 warehouses and branches with over 9 million square feet of space and locations in over 300 cities in more than 50 countries.
Revenues for Anixter in FY 2018 were $8.4 billion (19.7% gross margin) with an EBITDA of $368 million (4.4% EBITDA margin). The company’s trailing four-quarter financial performance – through June 30, 2019 – has revenues of $8.7 billion (19.9% gross margin) with an EBITDA of $403 million (4.7% EBITDA margin). With a purchase price of $3.8 billion, and on a trailing four-quarter basis, this calculates to a 9.4x EBITDA valuation multiple for the company.
Anixter, led by CEO Bill Galvin, is headquartered in the Chicago suburb of Glenview, IL. Upon closing of this transaction, which is expected during the first quarter of 2020, Mr. Galvin, along with other members of Anixter’s executive management team, will continue to lead the company.
“We believe this transaction is in the best interest of Anixter and our stockholders,” said Mr. Galvin. “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. As a private company, we believe Anixter will have greater flexibility to focus on and accelerate our long-term strategic priorities.”
Anixter was founded in 1957 by brothers Alan and William Anixter. In 1986, with annual sales of $600 million, Anixter was purchased for $500 million by Itel, a holding company controlled by Chicago financier Sam Zell. Over the next decade, Itel sold off many of its business units but retained Anixter, and in 1995 Itel changed its name to Anixter International.
Certain stockholders of Anixter, including those associated with Mr. Zell, the chairman of the Anixter board, which own about 9% of the company, have entered into a voting agreement with CD&R and will support the acquisition. Under the terms of the agreement, Anixter has 40 days to solicit additional offers for the company and includes a $45 million break-up fee.
“Anixter is an exceptionally well-positioned industrial distributor with leading market positions and differentiated capabilities that deliver strong customer value,” said Nate Sleeper, a partner at CD&R. “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.”
New York and London-based CD&R invests in European and US-based businesses. Since founding in 1978, the firm has invested $28 billion in 86 companies across a range of industries including numerous electrical and industrial distributors.
CD&R’s buy of Anixter will be funded by equity from the firm’s tenth fund, Clayton, Dubilier & Rice Fund X LP, and has fully committed debt financing from Bank of America, J.P. Morgan, Deutsche Bank Securities, and Credit Suisse.
Centerview Partners and Wells Fargo Securities are the financial advisors to Anixter with Sidley Austin providing legal advice and services.
© 2019 Private Equity Professional | October 31, 2019
