CDW Closes Takeover by Madison Dearborn, Providence


It's official.

One of the biggest private equity takeovers in channel history closed on Friday, as CDW announced the completion of its $7.3 billion takeover by Madison Dearborn Partners and Providence Equity Partners. It's shares stopped trading on Nasdaq at a price of $87.72, three cents per share below the takeover price that was put forth when the deal was announced on May 29.

"We look forward to partnering with the world-class investment firms of MDP and Providence Equity and continuing to build our industry-leading organization," CDW's chairman and CEO, John Edwardson, said in a prepared statement.

The question that observers will now look to answer is whether Madison Dearborn and Providence overpaid for the Vernon Hills, Ill.-based direct market reseller.

VARs have accused CDW of selling below cost in many cases to win accounts from other solution providers, a charge CDW has stopped short of addressing. In a conference call right after the Madison Dearborn deal was announced, Edwardson specifically sidestepped a question on the issue.

The private equity firms take control of the company at a time when CDW's sales appear to be brisk. Earlier this week, CDW reported September monthly sales hit $692 million, an increase of almost 23 percent over the same month a year earlier. In a research note to investors, Brian Alexander of Raymond James, noted that in the company's line card desktops, storage, software, video and memory were strong while notebooks and networking-communication products fell relative to recent months.

The company was founded in 1984 by Michael Krasny as Computer Discount Warehouse. It became publicly traded for the first time in 1993. At the close of the takeover by Madison Dearborn and Providence, all shares of the company's stock will no longer be traded in the stock market.

"CDW is a world-class company with a commanding market position and an outstanding track record for delivering the best quality products and exceptional service to its customers," said Ben Chereskin, Managing Director of Madison Dearborn Partners. "We have great respect for John and the talented management team and coworkers at CDW, and look forward to working together to build value at the company over the long-term."