Anixter to Buy HD Supply’s Power Solutions Segment for $825M
The Power Solutions unit provides a range of products and services to publicly traded utilities, construction and industrial companies.
Anixter Int'l announced it is acquiring the Power Solutions segment of HD Supply for $825 million.
GLENVIEW, Ill. – Anixter Int’l has entered into a definitive agreement to acquire the Power Solutions segment of HD Supply for $825 million, making it the largest acquisition in the company’s history. The deal is subject to customary post-closing working capital and other adjustments.
RELATED: Anixter Vies to Be Top Distributor With $420M Tri-Ed Buy
According to a press release, the acquisition 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. Anixter expects the deal will 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 more than 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. With approximately 130 branches located in 30 U.S. states and four Canadian provinces, Power Solutions reported fiscal 2014 revenue of $1.9 billion and adjusted EBITDA of $79 million.
RELATED: Powers Sees Strength in Anixter’s Security Offerings
“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,” says Bob Eck, president and CEO, Anixter. “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.”
Similar to Anixter, Power Solutions has built its business on providing supply chain services and value-added distribution to its customers, Eck continues. The combined companies “will offer broader solutions to our respective customers and substantial long-term growth and value creation for all Anixter stakeholders,” he says.
“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,” says Ted Dosch, executive vice president and CFO, Anixter. “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.”
The transaction is expected to close near the end of the third quarter and will be financed using available cash and additional borrowings. Anixter says it expects 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 Anixter’s second quarter 2015 earnings release on July 28.
Greenhill & Co. served as financial adviser; Skadden, Arps, Meagher & Flom served as legal counsel; and KPMG served as accounting adviser to Anixter on the transaction.
If you enjoyed this article and want to receive more valuable industry content like this, click here to sign up for our FREE digital newsletters!
Related Content
Security Is Our Business, Too
For professionals who recommend, buy and install all types of electronic security equipment, a free subscription to Commercial Integrator + Security Sales & Integration is like having a consultant on call. You’ll find an ideal balance of technology and business coverage, with installation tips and techniques for products and updates on how to add to your bottom line.
A FREE subscription to the top resource for security and integration industry will prove to be invaluable.
