During the WESCO International conference call to discuss the company’s recent earnings report, Chairman, President, and CEO John Engel made a few comments and answered reporter’s questions about the impending acquisition of Anixter International, following a bidding war with a private equity firm.
In his opening remarks, Engel pointed said, “We remain very excited regarding the transformational combination of WESCO and Anixter which will create a premier electrical and data communications distribution and supply chain services company. Our integration planning is well underway and we are actively speaking with external partner candidates to provide integration advisory services and to help us achieve the sizable synergy opportunity that this combination presents.” Engel also pointed out that the SEC and other required approvals are moving forward, and Anixter shareholders are expected to approve the deal in the near future. He expects the deal to be completed in the 2nd or 3rd quarter of this year.
During the question and answer session with reporters, Engel pointed out that during WESCO’s Investor Day last summer, he talked at length about “B2B distribution value chain, how that’s evolving, the impact of digital, what’s happening in terms of the customer end of our value chain and those customers are looking at consolidating the supplier base.” Last summer, Engel predicted, “The bigger distributors in the core and the distribution portion of value chain would come together. And I also said the imperative was that these will give the opportunity for the bigs to have a transformational combination that does several things. You have greater scale with an enhanced footprint, geographic footprint and a broader portfolio of supply chain services. That absolutely is the case with the WESCO/Anixter combination and also on the combined platform which provides significant growth in cross-selling opportunities. That absolutely is the case for the WESCO and Anixter combination.”
Engel added that both WESCO and Anixter are both well-run distributors with a strong cash flow. Engel believes that after the merger, they will be able to handle an economic slowdown, and he sees a strong first year financially after the merger. And, Engel will push for a more digital offering in the near future. “Finally, most importantly, the combined business would be in a much better position to invest in digital capabilities and to take a leadership role in transforming their business in the context of a more digitized value chain in B2B distribution, like what exists in B2C, the value chain. So very compelling set of rationale. I mean, the short summary would be, in terms of growth, one plus one is going to be much greater than 2.”
During the earnings conference call, Engel did not give specifics on the how the combined sales force will work, saying he is focused on getting the acquisition completed, and his integration team is working on those details.Tagged with Biggest News