The US’ Anixter International bought of the Power Solutions segment of HD Supply for $825 million. The acquisition, which is the largest in Anixter’s history, is expected to be accretive to earnings in the first full year of operation. The deal is subject to customary post-closing working capital and other adjustments.
The acquisition will transform Anixter into a leading North American electrical distribution platform and significantly expands its electrical and utility product portfolio and customer relationships.
Headquartered in Atlanta, Georgia, US, HD Supply’s Power Solutions segment distributes over 200,000 utility, electrical and industrial MRO products to around 13,000 customers including investor-owned utilities, public power utilities, electrical contractors and industrial businesses. It has 130 branches in 30 US states and 4 Canadian provinces. Power Solutions reported fiscal 2014 revenue of $1.9 billion and adjusted EBITDA of $79 million.
Bob Eck, Anixter’s president and CEO, said that the purchase is compelling, as it will allow Anixter to sharpen its focus, significantly enhance its competitive position in the electrical wire and cable business and further strengthen its customer and supplier value proposition. He added that the deal will transform Anixter’s existing utility business into a leading North American distributor to the utility sector and allow it to provide a full line electrical solution to existing customers, as well as give it broader access to the mid-size electrical construction market.
Ted Dosch, Anixter’s executive VP and CFO, explained that following the acquisition and the September 2014 acquisition of Tri-Ed as well as the June 2015 sale of Anixter’s OEM – Supply Fasteners segment, the company is well positioned for “substantial and sustainable long term growth.” He added that Anixter expects to generate significant free cash flow to support its capital allocation strategy, including a return to a long term target of 45-50% debt-to-total capital ratio within the short to medium term.
The transaction is expected to close near the end of Q3 2015 and will be financed using available cash and additional borrowings. The majority of transaction and integration costs will be incurred in fiscal years 2015 and 2016, Anixter said.
