CDW to be bought by Madison Dearborn for $7.3 bln
LOS ANGELES (Reuters) - Computer retailer CDW Corp. CDWC.O became the latest company to be swallowed up by a private equity firm, announcing on Tuesday it had agreed to be bought by Madison Dearborn Partners LLC for $7.3 billion.
CDW shares, which have already climbed about 39 percent since early March, had risen on Tuesday morning to $84.90, their highest Nasdaq level since September 2000, after the Wall Street Journal reported the company was in takeover talks.
CDW said in a statement late on Tuesday its board had held an auction for various potential bidders before approving the Madison Dearborn deal, under which CDW shareholders will get $87.75 in cash for each share of CDW common stock.
The price of the deal represents a premium of about 16.1 percent over CDW's closing share price of $75.56 on May 25, 2007, the last trading day prior to published reports regarding a potential transaction. Under terms of the deal, CDW's board will not declare an annual dividend in 2007, CDW said.
CDW's stock gave up some of its earlier gains to close on Tuesday up $7.55 a share, or nearly 10 percent, at $83.11.
The acquisition of CDW, which mainly sells to government agencies and businesses through a Web-based catalog, follows the company's report last month of a 24.5 percent rise in first-quarter net income.
The better-than-expected profit was buoyed by higher sales of notebook computers, storage equipment, software and video-related equipment. CDW has also recently expanded its distribution capacity, reorganized its sales force and entered a new market -- selling complex computer systems customized for each client -- in a bid to boost sales.
The Wall Street Journal had said Madison Dearborn was considered the front-runner among various private equity firms talking with CDW, which is based in Vernon Hills, Illinois.
Completion of the deal, subject to shareholder and regulatory approvals, is expected near the end of the third quarter or early in the fourth quarter. CDW said it will actively solicit proposals from third parties over the next 30 days.
CDW founder Michael Krasny, who serves as chairman emeritus, owned about 22 percent of CDW's outstanding shares as of the end of March.
The company said on Tuesday Krasny has agreed to vote or cause such shares to be voted in favor of the merger.
CDW competes against companies such as Insight Enterprises Inc. (NSIT.O) and Dell Inc. (DELL.O).
