AMSTERDAM The world's biggest electrical parts distributor, Rexel (RXL.PA), has agreed to buy Hagemeyer NV HAGN.AS for 3.1 billion euros ($4.62 billion) and sell some of its Dutch peer's units to rival Sonepar, the companies said on Friday.
Rexel is offering 4.85 euros per share in cash for Hagemeyer and its outstanding convertible bonds. Hagemeyer said its management board and supervisory board backed the bid.
The deal would strengthen Rexel's presence in Europe, boosting the region's share of group sales to 57 percent from 49 percent now, Rexel Chief Executive Jean-Charles Pauze told reporters on a conference call.
It would also reduce the share of its North America sales to 37 percent from 49 percent. Electrical parts distributors have seen slowing sales in the United States, hurt by an uncertain outlook and declining housing spending.
Rexel forecast annual synergies of 1.3-1.5 percent of 2007 sales by 2011 from the acquisition and said it would be accretive in 2008 on a recurring earnings per share basis.
Rexel shares were up 2.2 percent to 12.67 euros by 0842 GMT and Hagemeyer 2.6 percent higher at 4.71 euros, outperforming a 1 percent rise in the DJ Stoxx European industrial goods and services index .SXNP.
"I think it is a good price. It is quite a high premium, 40-50 percent, compared to developments of one, two months ago, before Sonepar's indicative bid," said Gilissen analyst Johan van den Hooven.
Sonepar withdrew its 4.25 euro per share bid last month.
Hagemeyer said it was confident that shareholders, some of whom had previously rejected Rexel's initial lower offer of 4.60 euros per share, would accept the sweetened bid.
"We are absolutely convinced we have their support. They represent a fair share of the total," Hagemeyer Chief Executive Rudi de Becker told reporters. He said the offer was a fair price for shareholders.
Rexel, which now owns 1.83 percent of Hagemeyer, has set a minimum acceptance level of 66.7 percent. It will make its offer in December and expects to close the deal in the first quarter of 2008.
In a side deal, privately-owned French Sonepar, which has a 10.5 percent stake in Hagemeyer, will buy Hagemeyer's North American, Asian-Pacific and selected European operations after the takeover is concluded.
Hagemeyer, with 2006 sales of 6.2 billion euros, distributes electrical materials and products for safety, maintenance, repair and operations to industrial users and electrical contractors in the construction and installation business.
It is the latest Dutch company to be acquired by foreign rivals, with the country's liberal competition rules making firms attractive takeover targets.
(Additional reporting by Foo Yun Chee; Editing by Paul Bolding)