Equity Firm to Buy CDW

CDW Corp. announced on May 30 that it has agreed to be bought by private equity firm Madison Dearborn Partners for approximately $7.3 billion. CDW shareholders will receive $87.75 in cash for each common share, which represents a premium of about 16% over the computer reseller’s closing share price of $75.56 on May 25, the last trading day prior to published reports regarding a potential transaction.

The acquisition of Vernon Hills, IL-based CDW follows last month’s report of a 24.5% rise in first-quarter net income. The $6.785 billion company recently expanded its distribution capacity, reorganized its sales force, and via its September purchase of $390 million Berbee Information Networks Corp. (“CDW Buys Its Way into IT Services Market”) expanded its IT services offerings.

The deal, subject to shareholder and regulatory approvals, is expected to close near the end of the third quarter or early in the fourth quarter. CDW officials said they would actively solicit proposals from third parties during the next 30 days.

Stuart Rose, managing director of Wellesley, MA-based investment bank Tully & Holland, tells MULTICHANNEL MERCHANT that the acquisition is a very “reasonable” deal for Madison Dearborn. “This represents another purchase by the booming private equity market,” he says. “This boom is fueled by cheap debt. To date, there haven’t been any major blowups, but as interest rates rise or a couple of companies flame out, this private equity boom will slow. The premium, only about 15% above the price before the rumors started to circulate, is very reasonable and less than many takeovers.”

Last year Madison Dearborn acquired scented candles manufacturer/marketer Yankee Candle Co. for $1.4 billion.

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