Is the Proposed Acquisition Best for Anixter International Inc. and Its Shareholders?
According to the complaint, on October 29, 2019, Anixter’s board approved a merger agreement with CD&R for $81 per share in cash, subject to a 40 day go-shop process that would solicit other potential bidders and included an extended 10-day “Excluded Party” period that allowed Anixter to continue negotiating with a bidder that made a proposal during the first phase of the go-shop. Anixter’s board chairman and Anixter’s CEO had powerful incentives to favor this deal with CD&R, including a promise from CD&R that Anixter’s CEO would continue to run the post-merger entity. Then, in November 2019, rival bidder and Anixter’s competitor WESCO International, Inc. made a superior offer to acquire Anixter for $90 per share consisting of 70% cash and 30% stock. Following this offer and in response to a series of increasing offers from alternate bidders, Anixter made several amendments to its merger agreement, including materially shortening the length of its go-shop and excluded party periods as well as increasing its two-tiered excluded party termination fees. These changes made it more difficult and expensive for WESCO to acquire the Company and therefore prevented shareholders from benefitting from the most favorable merger agreement.