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WESCO Bids for Anixter Buyout to Bolster Business Strength

Zacks Equity Research

In a bid to bolster its presence further in the electronics industry, WESCO International, Inc. WCC is making concerted efforts to double the size of its business.

This is evident from its latest move to set its sights firmly on Anixter International AXE buyout. WESCO recently proposed to acquire Anixter at $90 per share.

Anixter, a supplier of network and security, electrical and electronic plus utility power solutions is best known for its communications and security products.

Notably, this company is already into a merger agreement, per which it has agreed to get acquired by the private equity firm Clayton, Dubilier & Rice that offered a bid worth $86 per share and $2.50 contingent value rights.

Nevertheless, WESCO believes that its proposal is capable of aiding Anixter’s value creation and benefiting the latter’s shareholders who will get an opportunity to capitalize on the growth prospects of the combined entity.

Moreover, the proposed takeover is likely to deliver an immediate value to Anixter’s stockholders.

Acquisition to Fuel WESCO’s Growth

The buyout under review opens immense growth opportunities for WESCO.

The consolidated company would be a premier electrical and data communications distribution player if WESCO’s strategic move materializes.

Moreover, the integration will expand WESCO’s current employee strength that stands at 9,300. It will also enhance the company’s talent hub. Notably, Anixter has 8,900 employees.

We believe, these facts will likely to aid synergies for WESCO in the electronics industry, which is riding on the growing proliferation of electric components and electrical equipment in every major sector across the world.

Hence, Anixter’s comprehensive product portfolio is expected to contribute well to WESCO’s top-line growth in the long run.

Further, all these benefits might help WESCO gain investor confidence.

We note that the share price of the company closed at $58.57 on Dec 24, surging 5.1%.


WESCO International, Inc. Revenue (TTM)

WESCO International, Inc. Revenue (TTM)

WESCO International, Inc. revenue-ttm | WESCO International, Inc. Quote

Wrapping Up

Acquisitions that are strategic fit have been playing an instrumental role in shaping up WESCO’s growth trajectory from the past many years.

Notably, the company’s M&A activity helped fortifying its product and services portfolio. Further, these tactical actions bolstered its customer reach.

In third-quarter 2019, benefits from acquisitions drove the company’s results.

If Anixter accepts WESCO’s offer, the transaction will expand the company’s key offerings to further add capabilities to its portfolio strength.

Zacks Rank & Stocks to Consider

Currently, WESCO carries a Zacks Ranks #3 (Hold). Some better-ranked stocks in the broader technology sector are Garmin Ltd. GRMN and KLA Corporation KLAC. While Garmin sports a Zacks Rank #1 (Strong Buy), KLA carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Garmin and KLA is currently pegged at 7.35% and 11.84%, respectively.

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Garmin Ltd. (GRMN) : Free Stock Analysis Report
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