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Case Studies

Peter A. Sokoloff & Co. regularly analyzes transactions which occur within the industries covered. An archive of these case studies is kept online as a courtesy to our colleagues. To receive by e-mail new case studies as they are prepared, please e-mail [email protected] with your contact information.

Archives > Transaction Case Study 75

SOKOLOFF & COMPANY CASE STUDY:
Anixter Acquires Tri-Ed

DATE ANNOUNCED: August 11, 2014
BUYER: Anixter International, Inc. (NYSE: AXE)    
SELLER: Tri-Ed     
PURCHASE PRICE: $420M
FORM OF PURCHASE PRICE: Cash

SELLER’S FINANCIAL INFORMATION AND M&A MULTIPLES:

Year 2010 2011 Trailing Twelve Months through
June 20, 2014

Revenue

Annual numbers not published; it was announced that historical topline growth has been CAGR of 9%.

$560M

EBITDA

Annual numbers not published, announced historical growth of EBITDA was “low teens.”

$36M

Enterprise Value

 

 

$420M

Multiple of Revenue

 

 

.75

Multiple of EBITDA

 

 

11.67

TRANSACTION DRIVERS:
Bob Eck, Anixter’s President & CEO said “The acquisition of Tri-Ed is a strategic opportunity for Anixter and our security business, consistent with our vision to create a leading global security platform… the combination also brings Anixter’s expertise in IP video surveillance to Tri-Ed’s customers and provides access to the residential construction end market at an attractive point in the recovery cycle as well as to a community of security integrators and dealers not currently serviced by Anixter.”  

Ted Dosch, Anixter’s Executive Vice President of Finance and CFO, further stated “Consistent with our stated priorities for capital allocation, the Tri-Ed acquisition accelerates the pace of growth in our security business, which is one of our strategic growth initiatives.”

SOKOLOFF COMMENTARY:
Anixter had to pay a premium in order to win Tri-Ed at the end of a heated auction process.  The acquisition will not yield much accretion to shareholders in the near term.  That said, this is an excellent move for Anixter; Bob Eck and Ted Dosch are to be congratulated for establishing what looks to be an outstanding long term success.   Financed with debt yielding about 4.5%, total AXE debt post-closing will be less than 3x EBITDA.   Add in top line cross selling synergies (Tri-Ed brings lots of new SKUs to AXE and AXE brings door lock, IP Video and Enterprise Cabling to Tri-Ed); enhanced international opportunities; and the fact that they are now #2 in the Security Distribution market behind Honeywell’s ADI, and you have a clear case for deeming the acquisition a break-out success.

And then there is the underlying theme which has set the stage for many businesses in the decades ahead – convergence.  The dealer/installer of the future will be a one-stop shop for every application and device under the sun that goes into a home or business.  By bringing together all aspects of low voltage and electrical, Anixter sets the bar for the one stop distribution machine that installers will look to for selection, expertise, fair prices and time saving.  Few others in the distribution business will be able to duplicate this capability.



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