International. Wesco International announced that it has completed its merger with Anixter International Inc., which thus becomes a wholly owned subsidiary of Wesco International.
John Engel, President, President and Chief Executive Officer, said: "Today marks an important milestone for Wesco and Anixter. By combining two industry leaders with a successful track record, we are creating the world's leading electricity, communications and utility distribution and supply solutions company. This is a transformative combination that provides substantial value creation for our customers, supplier partners, employees, investors and the communities in which we operate. Wesco's capabilities in industry, construction and utilities matched Anixter's expertise in communications, security, and cable and wire creating an industry-leading line for our customers. By bringing together our complementary products, services and technologies, there are significant cross-selling opportunities that allow us to offer more solutions to more customers, in more places around the world."
Compelling strategic and financial reasoning
- Improves scale and global position. The combined company generated pro forma revenue in 2019 of more than $17 billion and is a leading distributor of electrical and data communications in North America. The growing scale allows the combined company to accelerate digitization strategies and provides a platform for growth in attractive international markets.
- Expands and diversifies the portfolio of products and services. The combined company has a comprehensive and balanced portfolio that unites Wesco's capabilities in industry, construction and utilities with Anixter's expertise in data communications, security, and wire and cable. By uniting companies' complementary products, services, technologies and solutions, important cross-selling opportunities are created, strengthening the customer value proposition and supplier relationships.
-Offers substantial synergies. Wesco expects to realize annualized run rate cost synergies of more than $200 million by the end of the third year through efficiencies in corporate and regional overhead, optimization of the branch and distribution center network, and productivity in field operations and supply chain. In addition, Wesco expects incremental sales growth opportunities to emerge by cross-selling the companies' complementary product and service offerings to an expanded customer base and capitalizing on the enhanced capabilities in both networks.
-Provides immediate revenue accretion and significant free cash flow generation. The combination is expected to increase Wesco's earnings in the first full year of ownership and, with the realization of synergies, increase substantially thereafter. Wesco also expects the transaction to generate significant margin expansion and EPS growth. The combined company offers strong free cash flow generation, supporting continued investments in the business and enabling a return on capital to shareholders in the future.
- Ability to unlock quickly. Wesco will use the strength of the company's combined cash flows, including significant synergies, to reduce its leverage rapidly and expects to be within its long-term target leverage range of 2.0x to 3.5x in 36 months.
