Anixter International Inc. Financial Statement Analysis
ITEM 1A. RISK FACTORS.
The following factors could materially adversely affect our operating results and financial condition. Although we have
tried to discuss key factors, please be aware that other risks may prove to be important in the future. New risks may emerge at
any time, and we cannot predict those risks or estimate the extent to which they may affect our financial performance.
The pendency of our agreement to be acquired by WESCO International, Inc. could have an adverse effect on our
business.
On January 10, 2020, we entered into a definitive merger agreement under which we agreed to be acquired by WESCO
International, Inc. ("WESCO"). Under the terms of the merger agreement, at closing, each share of Anixter common stock will
be converted into the right to receive (i) $70.00 in cash, without interest (subject to adjustment as set forth in the merger
agreement), (ii) 0.2397 shares of WESCO common stock (subject to adjustment as set forth in the merger agreement) and (iii)
0.6356 depositary shares, each representing a 1/1,000th interest in a share of newly issued WESCO Series A fixed-rate reset
cumulative perpetual preferred stock, $25,000 stated amount per whole preferred (subject to adjustment as set forth in the
merger agreement), in each case, less any applicable withholding taxes. See Note 13. "Subsequent Event” in the notes to the
Consolidated Financial Statements. Because the exchange ratio is fixed for the common stock portion of the merger
consideration and the market price of WESCO common stock has fluctuated and will continue to fluctuate, at the time of the
special meeting of stockholders to approve the merger, our stockholders will not know or be able to determine the market value
of the merger consideration they would receive upon completion of the merger. After the merger, our stockholders will have
lower ownership and voting interest in WESCO than they currently have in Anixter and will exercise less influence over
management.
The announcement and pendency of the merger could cause disruption in our business, including the potential loss or
disruption of commercial relationships prior to the completion of the merger. For example, parties with which we do business
may be uncertain as to the effects on them of the merger, including with respect to their current or future business relationships
with us. These relationships may be subject to disruption as customers, suppliers and other persons with whom we have a
business relationship may delay or defer certain business decisions or might decide to terminate, change or renegotiate their
relationships with us or consider entering into business relationships with other parties. These disruptions could have an adverse
effect on the results of our operations, cash flows and financial position. The announcement and pendency of the merger could
also have a potential negative effect on our ability to retain management, sales and other key personnel.
The merger agreement generally requires us to operate our business in the ordinary course of business pending
consummation of the merger, but includes certain contractual restrictions on the conduct of our business prior to completion of
the merger. These restrictions may prevent us from taking certain specified actions or otherwise pursuing business opportunities
during the pendency of the merger that may be beneficial to us. The merger agreement also contains provisions that limit our
ability to pursue alternatives to the merger and that could discourage a potential competing acquirer of Anixter form making a
favorable alternative transaction proposal. In addition, matters relating to the merger (including integration planning) will
require substantial commitments of time and resources by our management, which could divert their time and attention. We
have also incurred, and will continue to incur, significant non-recurring costs in connection with the merger that we may be
unable to recover. Further, the merger agreement requires us to pay a substantial termination fee to WESCO in certain
circumstances.
The risk, and adverse effect, of any disruption could be exacerbated by a delay in completion of the merger or termination
of the merger agreement. Completion of the merger is subject to the satisfaction or waiver of a number of conditions, many of
which are not within our control. The failure to satisfy all of the required conditions could delay the completion of the merger
for a significant period of time or prevent it from occurring. We cannot provide assurance that our pending merger with
WESCO will be completed. Failure to complete the merger could also negatively affect our stock price and our future business
and financial results.
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