Posted March 9, 2020

WESCO International updates financing plan for Anixter merger

The recent turmoil on Wall Street has resulted in WESCO International changing how the company will finance its acquisition of Anixter International.

Based on current market conditions, WESCO expects to fund the entirety of the cash portion of the merger consideration with debt and cash-on-hand at WESCO and Anixter. WESCO previously anticipated funding a portion of the cash consideration through the issuance of WESCO common stock or other equity or equity-linked securities, in addition to issuing debt.

"Given current market conditions, we are adjusting our financing plan for the cash portion of the Anixter merger consideration. Costs of issuing equity and debt have materially changed since we announced the transaction in January," said John Engel, WESCO chairman, president, and CEO. "Our equity is the most valuable component of our capital structure and we are unwilling to use it as a source of financing at the current market value. Issuing debt instead of equity adds approximately one-half turn to our expected leverage at closing. We expect the outstanding cash flow generation of the combined company to service the higher level of debt while retaining our flexibility to invest in the business and de-lever to within our target leverage range within three years."

The closing price for the company's stock on March 9 was $27.17. When the agreement for the companies to merge was approved in January, the stock was trading above $56 per share.

Click here to read more about how WESCO plans to finance the transaction.