Acquisition of Windy City Wire
Diploma PLC is pleased to announce the proposed acquisition of Windy City Wire & Cable (“Windy City Wire”), a leading value-add distributor of premium quality, low voltage wire and cable in the US for up to ca. £357m ($465m).
Windy City Wire is a highly attractive business in a core Diploma market. It is a value-add distributor to a diverse range of end customers and segments. Windy City Wire has a suite of trademarked brands and patented products and provides the industry’s most comprehensive cable management system, delivering a compelling customer proposition of speed, convenience and productivity.
The business operates from a large facility in Bolingbrook, Illinois and has a US national footprint of 19 warehouses that, alongside some in-house light manufacturing, ensures delivery speed and responsiveness for their customers. These attributes create competitive advantage and strong customer loyalty. Over the last 10 years, Windy City Wire has grown at 12% on average per annum and now has revenues of nearly $200m.
Windy City Wire’s co-founder and Chief Executive Officer, Rich Galgano, and the Executive management team will remain with the business in their current roles. Consistent with the Diploma decentralised management model, the business will retain its brand, heritage, and culture.
Diploma PLC has also separately announced a proposed equity fundraising of up to 10 percent of the issued share capital of the Company to part fund the acquisition of Windy City Wire. The balance will be funded through new debt facilities. Completion of the acquisition of Windy City Wire is expected to occur by mid-November 2020, subject to receipt by the Company of the equity placing proceeds and the continuing availability of the new debt facilities, and is conditional on a number of customary closing conditions.
Johnny Thomson, Diploma’s Chief Executive Officer commented:
“The acquisition of Windy City Wire is an exceptional opportunity for Diploma. As a high-quality wire and cable distribution business with a strong management team and an impressive value-add customer proposition, Windy City Wire is a perfect fit with our business model. Furthermore, it accelerates our strategy of focussing our growth in our key markets in a product area we know well, providing a scalable platform for our Controls sector in the US. The business has an excellent performance track record and is positioned well in high structural growth end segments to deliver exciting growth in the future.
“In year one, the transaction is expected to be both significantly earnings enhancing and cover our cost of capital, while allowing us to maintain a conservative and flexible balance sheet to pay dividends and make further bolt-on acquisitions as opportunities arise. Recent months have confirmed the resilience of the Diploma model and validated our strategic focus on building value-add, scalable, well diversified businesses in core markets. I am confident in the future of our Group.”