Research Update: WESCO International Inc. Downgraded To 'BB-' On Upcoming Merger With Anixter; Outlook Stable; Proposed Notes Rated 'BB-'

Pittsburgh-based electrical products distributor WESCO International Inc. is raising debt financing to fund its previously announced merger with U.S.-based Anixter International Inc., a distributor of data communications, security, and wire and cable products, for a total transaction consideration, including fees, of about $5.0 billion. We expect the transaction to close in the second or third quarter of 2020. The merger will consolidate two sizable distributors and roughly double WESCO's revenue and EBITDA base. Combined, the companies posted revenues of about $17.2 billion and S&P Global Ratings' adjusted EBITDA of about $1.0 billion in 2019. However, we believe the company's debt leverage will also increase substantially due to the largely-debt financed transaction and near-term macroeconomic headwinds. As a result, we are

... WESCO International Inc. is raising debt financing to fund its previously announced merger with U.S.-based Anixter International Inc., a distributor of data communications, security, and wire and cable products, for a total transaction consideration, including fees, of about $5.0 billion. We expect the transaction to close in the second or third quarter of 2020. - The merger will consolidate two sizable distributors and roughly double WESCO's revenue and EBITDA base. Combined, the companies posted revenues of about $17.2 billion and S&P Global Ratings' adjusted EBITDA of about $1.0 billion in 2019. However, we believe the company's debt leverage will also increase substantially due to the largely-debt financed transaction and near-term macroeconomic headwinds. - As a result, we are lowering all our ratings, including our issuer credit ratings on WESCO and its subsidiary WESCO Distribution Inc. to '##-' from '##'. In addition, we are removing...

Research Update