IDG Board Recommends Accepting WESCO's $130M Bid

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MDM Blog: Look Beyond Numbers in IDG Deal

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April 16, 2008

IDG Board Recommends Accepting WESCO's $130M Bid

Atlanta, GA-based Industrial Distribution Group's board of directors announced it was prepared to accept WESCO Distribution Inc.'s offer of $11.75 per share, or $130 million, and withdraw its recommendation of the pending acquisition by Platinum Equity. WESCO was the previously unnamed bidder in the war for the industrial distributor, which had $537 million in sales last year.

If the WESCO deal goes through, under the Platinum merger agreement, IDG would have to pay a 3% break-up fee. WESCO has agreed to reimburse the company for that fee.

WESCO Chief Financial and Administrative Officer Stephen Van Oss said IDG was a good fit for the company. Like IDG, WESCO also has a substantial integrated supply business.

"IDG's small-site integrated supply services is a great strategic fit for WESCO and extends our capabilities to a broader array of customers," he said. "... Additionally the acquisition of IDG and their management team augments our existing industrial MRO capabilities, adding a broader base of products and services that can be offered to our large base of National Account customers."

Van Oss said IDG's past financial performance was "stable" and that WESCO sees the potential for improvement in the company. WESCO will finance the acquisition through its existing financial facilities.

Platinum Equity had offered $10.30 a share in cash, or $113 million. The private equity fund, which owns Strategic Distribution and metals distributor Ryerson, will have the opportunity to match or top the WESCO offer. Platinum has until April 21 to do so.

The third bidder for IDG, Luther King Capital Management, will be allowed to continue its evaluation of the distributor. Richard M. Seigel, Chairman of the Board, said: "While we do not know whether Platinum Equity or the Luther King companies will decide to offer a superior outcome for our stockholders, it is consistent with our contractual obligations to Platinum Equity and fiduciary duties to our stockholders to provide both of them a reasonable opportunity to do so."

WESCO is a distributor of electrical construction products and electrical and industrial maintenance, repair and operating (MRO) supplies, and is a provider of integrated supply services.

IDG is an industrial MROP distributor and integrator supplying cutting tools, hand and power tools, abrasives, material handling equipment, coolants, lubricants, and safety products.

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