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Anixter and WESCO Complete Market-Shifting Deal: What’s Next?

The largest B2B distribution M&A deal finalized Monday, and it is going to have a big impact on electrical, industrial and datacomm distribution.
Anixter company logo on sign outside

Editor’s note: This blog’s author, MDM VP Sales, Analytics  & E-Business John Gunderson, was part of the management team at HD Supply from 2011 to 2013 when they were owned by a group of private equity backers, including Clayton, Dubilier & Rice, prior to becoming a publicly traded company. He remained at HD Supply and was on the leadership transition team for the sale of HD Supply Power Solutions to Anixter from 2014- 2017.

This combination of the No. 2 (Anixter) and No. 3 (WESCO) largest electrical distributors on MDM’s 2019 Top Electrical Distributors Market Leaders list makes the new-look WESCO the largest electrical distributor — by far — in North America. The companies’ combined 2019 revenue totals more than $17 billion, about 70% bigger than the current largest company in this space, Sonepar.

But what’s next for the WESCO and its new wholly owned subsidiary? And, more importantly, what’s next for the electrical distribution segment? To kick off our series on the WESCO-Anixter deal, let’s start with a deep dive into Anixter’s business divisions before WESCO bought it.

Pre-acquisition, Anixter was organized in three business units: Network & Security Solutions (NSS) Electrical & Electronic Solutions (EES) and Utility Power Solutions (UPS).

\"Anixter

\"Anixter

Now, let’s shift to WESCO and the company’s plans for its newest and largest asset. WESCO knows all three of Anixter’s divisions — NSS, EES and UPS — from a competitor’s perspective.

The company has been making investments in datacomm/security (what Anixter calls NSS) with a series of acquisitions and line expansions across their North American footprint for more than a decade (WESCO’s major acquisitions included Communication Supply Corp in 2006).

WESCO knows what Anixter calls its EES business intimately across North America with its national electrical distribution footprint.

Before this deal, WESCO and Anixter were the two of the largest distributors in the utility channel. This specialized electrical distribution channel is something both companies know as well as any distributor in North America. The united companies now compose the largest utility channel electrical distributor in North America with more than $3 billion in utility sales in 2019.

The integration process will be interesting to watch over the coming months. WESCO stated that the acquisition would create more than $200 million in operational savings and mutual synergies, including “a reduction in corporate and regional overhead, including duplicative public company costs, branch and distribution center optimization, and efficiencies in procurement, field operations and supply chain. In addition, the combined company would be well-positioned to enhance growth by providing cross-selling opportunities of complementary product offerings to its expanded customer base.”

One thing is for certain: WESCO and Anixter have been competing day-in and day-out for decades, and the acquisition creates “a big rock in the electrical & datacomm distribution pond that will create waves.”

We’ve been following closely WESCO International Inc.’s months-long acquisition of Anixter International Inc. and are launching a series of MDM articles on the impact of the merger/acquisition on the industry. Join us this Friday on MDM Live where our team will take a more in depth look on each of the key business segments the New WESCO will impact.

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