CDW (CDW) Acquires Sirius Computer Solutions for $2.5B Cash

October 18, 2021 7:00 AM EDT

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CDW Corporation (Nasdaq: CDW) today announced it has entered into a definitive agreement to acquire Sirius Computer Solutions, Inc. (“Sirius”) from an affiliate of Clayton, Dubilier & Rice (“CD&R”) for $2.5 billion in cash, subject to customary closing adjustments. The transaction is expected to significantly accelerate CDW’s services and solutions capabilities and further enhance CDW’s ability to solve customers’ increasingly interconnected and complex technology challenges. The combined company would have had 2020 net sales of $20.5 billion1 and the acquisition is expected to deliver gross margin, non-GAAP operating income (NGOI) margin2, and non-GAAP earnings per diluted share3 accretion.

Founded in 1980, Sirius is a leading provider of secure, mission-critical technology-based solutions for approximately 3,900 large and mid-sized customers. One of the largest IT solutions integrators in the United States, Sirius generated 2020 net sales of $2.04 billion1, leveraging its services-led approach, broad portfolio of hybrid infrastructure solutions, and the deep technical expertise of its 2,600 coworkers to support corporate and public customers and serve as a consultative solutions partner across the full ecosystem of leading and emerging vendors. Sirius’ services and solutions capabilities in key growth areas, including Hybrid Infrastructure, Security, Digital and Data Innovation, and Cloud and Managed Services, will enhance the breadth and depth of CDW’s services and solutions offerings.

“As customers require increasingly complex and critical digital transformation initiatives, Sirius’ broad portfolio of world-class technology-based solutions and services-led approach will immediately add to our capabilities to meet this demand,” said Christine A. Leahy, president and chief executive officer, CDW. “Combining our businesses will accelerate progress on our three-part growth strategy by augmenting our portfolio and enhancing our ability to deliver customer-centric outcomes across the full technology solutions stack and lifecycle. We look forward to welcoming the talented Sirius team and leveraging our common values and collective unparalleled expertise to deliver the best customer experience and create value for CDW shareholders.”

Sirius President & Chief Executive Officer Joe Mertens said, “Today is an exciting day for Sirius. We have long admired CDW and welcome the opportunity to bring our complementary services and solutions capabilities to serve a broader market of customers as a combined company. Sirius and CDW share common values and a performance-driven, customer-focused culture. We look forward to the opportunity to combine Sirius’ considerable talents with CDW’s, and to being part of a larger, stronger organization that will be even better positioned for growth in the evolving IT services and solutions landscape.”

“Sirius is a strong business with a talented team that offers compelling technology solutions to their clients,” said CD&R Partner Stephen Shapiro. “We are proud to have supported the company’s growth, and we wish them continued success in the future.”

Delivering Compelling Strategic and Financial Benefits and Strong Cultural Fit

  • Accelerates CDW’s service and solutions capabilities. The transaction is expected to accelerate and enhance capabilities in key growth areas such as Hybrid Infrastructure, Security, Digital and Data Innovation, Cloud and Managed Services, creating opportunities to deepen customer relationships and expand customer reach.
  • Adds services scale, further balances CDW’s portfolio and drives enhanced profitability. The transaction will meaningfully broaden CDW’s services portfolio. Combining with Sirius is expected to expand CDW’s Services portfolio by approximately 45%, from approximately $900 million annual net sales in 2020 to approximately $1.3 billion in combined annual net sales1. The increased mix of services is expected to further balance and diversify CDW’s portfolio mix with enhanced profitability.
  • Delivers immediate margin and EPS accretion1. The transaction is expected to immediately increase CDW’s gross margin by approximately 110 basis points and NGOI margin by approximately 20 basis points on a combined 2020 basis2. The transaction also would have added $0.62 to non-GAAP earnings per diluted share on a combined 2020 basis3.
  • Optimal use of capital, maintaining disciplined capital allocation prioritization. The transaction is expected to further enhance CDW’s free cash flow, which is expected to enable deleveraging to the Company’s target net leverage range by year-end 2022, while continuing to return capital to shareholders and reinvest in the business for growth.
  • Both companies united by common values and culture. CDW and Sirius share common values and a culture centered around delivering an outstanding customer experience, which gives CDW confidence that this combination will be successful in creating value to all stakeholders.

Timing, Approvals and Financing

The transaction is expected to close in December 2021, subject to receipt of regulatory approvals and the satisfaction of other customary closing conditions. CDW has committed financing for the transaction. Upon completion of the transaction, CDW expects to have an initial net leverage ratio of approximately 3.3x4. The Company will target deleveraging to approximately 2.5x to 3.0x by the end of 2022 in alignment with its capital allocation priorities.

Advisors

Evercore is serving as financial advisor to CDW and Sidley Austin LLP is serving as legal advisor. Guggenheim Securities, LLC is serving as financial advisor to CD&R and Sirius and Kirkland & Ellis LLP is serving as legal advisor.

Conference Call and Webcast

CDW will hold a conference call today, October 18, 2021 at 7:00 am CT to discuss the transaction. The conference call, which will be broadcast live via the Internet, and a copy of this press release along with supplemental slides used during the call, can be accessed on CDW’s website at investor.cdw.com. For those unable to participate in the live call, a replay of the webcast will be available at investor.cdw.com approximately 90 minutes after the completion of the call and will be accessible on the site for approximately one year.



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