WESCO International, Inc. Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K, dated January 13, 2020, reports on events occurring on January 10, 2020. WESCO International, Inc. ("WESCO") entered into a definitive Agreement and Plan of Merger to acquire Anixter International Inc. ("Anixter"). Upon completion, Anixter will become a wholly-owned subsidiary of WESCO.
Key Financial Metrics and Transaction Structure
The filing details the financial structure of the proposed merger rather than WESCO's standalone operating results for a specific period. Key financial terms include:
- Merger Consideration per Anixter Share:
- Cash: $70.00 per share (subject to adjustment).
- Stock: 0.2937 shares of WESCO common stock (capped at 19.9% of WESCO's outstanding shares).
- Preferred Stock: 0.6356 depositary shares representing Series A Preferred Stock (valued at approximately $15.89 per Anixter share).
- Financing Commitments: WESCO secured a commitment letter from Barclays Bank PLC for:
- $1.2 billion senior secured asset-based revolving credit facility.
- $3.125 billion unsecured bridge facility.
- Termination Fees:
- Anixter to pay WESCO: $100 million (in specific scenarios such as change of recommendation or superior proposal).
- WESCO to pay Anixter: $190 million (reverse termination fee if regulatory clearances are not obtained).
Note: The filing text does not provide WESCO's current revenue, profit, cash flow, or debt levels outside of the new financing commitments.
Material Changes and Conditions
The transaction represents a material change in WESCO's corporate structure and capitalization. The merger is subject to several conditions precedent, including:
- Approval by Anixter stockholders.
- Expiration of waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act and foreign antitrust laws.
- Effectiveness of the registration statement on Form S-4.
- Listing authorization on the New York Stock Exchange for WESCO common stock and the new preferred stock.
A voting agreement was executed with stockholders associated with Anixter Chairman Samuel Zell, representing approximately 10.8% of Anixter's outstanding shares, agreeing to vote in favor of the merger.
Outlook, Risks, and Management Commentary
Management intends to provide supplemental information regarding the transaction in presentations to analysts and investors. The filing includes a cautionary note regarding forward-looking statements, highlighting significant risks that could prevent the transaction's completion or alter its benefits:
- Failure to obtain required governmental or regulatory approvals.
- Failure of Anixter stockholders to approve the merger.
- Disruption of management time and ongoing business operations.
- Adverse effects on the market price of WESCO or Anixter stock.
- Challenges in integrating the businesses and achieving anticipated synergies.
- Potential loss of customers, key personnel, or supplier relationships.
The merger agreement includes a "downside protection" mechanism for the stock consideration: if WESCO's stock price falls below $58.88 prior to closing, the cash consideration will increase to offset the decline, up to a maximum of $2.82 per share.
Investor Verification Checklist
- Verify the final approval status of the merger by Anixter stockholders.
- Monitor the status of antitrust clearances under the HSR Act and foreign jurisdictions.
- Review the definitive proxy statement/prospectus (Form S-4) for detailed financial projections and risk factors.
- Track WESCO's stock price to determine if the cash consideration adjustment mechanism is triggered.
- Assess the impact of the $4.325 billion in new debt financing on WESCO's leverage ratios and credit rating.