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STI Stock AXE To Be Acquired By CD&R For $3.8 Bln

The stock, Anixter International Inc. (AXE), featured on our 'Short-Term Investor' on April 23, 2019, at an opening price of $64.72. On October 29, 2019, the stock touched an intra-day high of $71.79, representing a gain of 10.9%. The stock soared 14.37% in the pre-market session today on the news of it being acquired by CD&R for $3.8 billion.

Anixter To Be Acquired By CD&R For $3.8 Bln

Anixter, a leading global distributor of Network & Security Solutions, Electrical & Electronic Solutions and Utility Power Solutions, said it has agreed to be acquired by an affiliate of Clayton, Dubilier & Rice or CD&R in an all cash transaction valued at about $3.8 billion. The transaction, which will take Anixter private, is expected to close by the end of the first quarter of 2020.

Anixter's Board unanimously approved the agreement with CD&R and recommends that Anixter stockholders approve the proposed merger and merger agreement.

Under the terms of the merger agreement, CD&R-managed funds will acquire all of the outstanding shares of Anixter common stock for $81.00 per share in cash. This represents a premium of about 13% over Anixter's closing price on October 29, 2019.

The transaction is subject to the approval of Anixter's stockholders, regulatory approvals and other customary closing conditions. The transaction has fully committed financing and is not subject to any condition with regard to the financing.

It is anticipated that upon completion of the transaction, Bill Galvin, along with other members of Anixter's executive management team, will continue to lead the company.

Under the terms of the merger agreement, Anixter may solicit superior proposals from third parties for a period of 40 calendar days continuing through December 9, 2019. Anixter would be obligated to pay a $45 million break-up fee to CD&R, under certain circumstances.

Q3 Results

The company reported third-quarter net income of $59.3 million or $1.73 per share compared to $47.6 million or $1.40 per share last year.

Adjusted earnings per share increased 19.3% to $1.92 from the prior year.

Sales for the quarter rose 2.0% to $2.2 billion from last year. Organic sales increased 2.6%.

Analysts polled by Thomson Reuters expected the company to report earnings of $1.65 per share and revenues of $2.24 billion. Analysts' estimates typically exclude special items.

Q4 Outlook

For the fourth quarter, the company expects sales growth to be in the range of 2.0% - 4.0%, or organic growth of 2.5% - 4.5%.

The company reaffirmed its full year 2019 sales outlook of 4.0% - 5.0%. After adjusting for copper and foreign exchange, the organic sales growth outlook is 4.5% - 5.5%.

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