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In a deal valued at $72 million, Anixter International Inc., Glenview, IL, a distributor of communication products, electrical and electronic wire & cable and a distributor of fasteners and other small Class C parts to original equipment manufacturers, has offered to acquire Infast Group plc, a U.K.-based distributor of fasteners and other C class inventory components to OEMs. Infast's distribution business had revenues last year of $287 million.
The offer has been unanimously recommended by the Infast Board of Directors. Anixter has received commitments to accept the offer from shareholders representing approximately 58.70 percent of the 114.34 million outstanding shares of Infast. The offer is subject to a number of conditions including a minimum acceptance level of 90 percent.
In February 2005 Infast reached an agreement to sell the last of its manufacturing operations. That transaction completed a multi-year restructuring program in which Infast sold a number of businesses unrelated to its current fastener and "C" class parts distribution business. In its audited financial statements for the financial year ended Dec. 31, 2004 Infast reported sales and earnings before interest, taxes and exceptional items of $287.3 million (£157.1 million) and $5.7 million (£3.1 million), respectively, from the continuing distribution operations which Anixter is proposing to purchase. Currently Infast operates 25 distribution centers in the U.K. and 6 in the U.S. and in total employs 900 people.
Based on the offer price of 34 pence per Infast Share, Anixter expects to pay a total of $72.2 million (£39.47 million) for all of the outstanding and to be issued shares of Infast. As a result of the Acquisition, Anixter will assume the outstanding debt obligations of Infast which at December 31, 2004 totaled $25.4 million £13.9 million). The purchase of the shares will be funded from on-hand cash balances of Anixter.
In its most recent quarter ended Apr. 1, Anixter reported revenues of $876.5 million, up 15% from the first quarter in the previous year. That included $18.7 million in revenues from the acquisition last June of Distribution Dynamics Inc. Year-to-year organic sales growth was 11%.
"The addition of the Infast operations to our existing OEM supply business is another significant step in positioning ourselves as a leader in the supply of fasteners and other small parts to original equipment manufacturers, service organizations and government support operations," said Robert W. Grubbs, president and CEO of Anixter International. "The Infast customer base adds to and complements the existing base of multi-location and multi-national customers we service today. Once this transaction is complete we will have proforma annual 2005 projected sales in this market of approximately $755 million.
"As we have developed our position in this market place over the past three years our ability to provide quality products along with reliable supply chain services has positioned us well with the large multi-location and multi-national customers we serve. Our geographic presence, financial strength and focus on service give us the ability to capitalize on the opportunities in the marketplace. The proposed acquisition, in addition to bringing important new customers to our business, also adds to the scale of our operations and brings a proven group of employees that will contribute to a continued focus on enhancing our service capabilities," continued Grubbs.
"We expect this transaction to be immediately accretive to earnings. The completion of this proposed transaction will enhance our ability to compete effectively in this market on a global basis. Over time, as we blend the strengths, skills and capabilities of the Infast operations with our existing OEM Supply business, we expect the earnings contribution from the combined business to grow in a