Federal Regulators Approve CDW Purchase

Madison Dearborn Partners agreed to buy CDW for $87.75 per share in late May. CDW's board of directors has approved the merger agreement and recommends approval by shareholders.

Shares of CDW were trading at $85.55, up 46 cents or 0.5 percent, in Monday morning trading.

Meanwhile, CDW released more background details of its merger in an SEC document filed last week.

The idea of a sale was first proposed by CDW founder and chairman Michael Krasny at a May 2006 board meeting but the board decided not to pursue a sale at that time, according to the document. Nine months later, Krasny said he'd been contacted by two private equity funds with interest in buying CDW, neither of whom is believed to be Madison Dearborn.

Krasny told the board that the two funds wanted exclusive negotiations before the company was made available to other potential acquirers and he later agreed to recuse himself from all meetings discussing a possible sale.

Meanwhile, CDW's financial adviser, Morgan Stanley, contacted six private equity firms to pursue bids. Morgan Stanley and the board also decided to limit interest to private equity firms because it believed nobody would outbid one of the equity firms.

In March 2007, CDW received several letters of interest with offers ranging between $68 and $73 per share. Madison Dearborn's letter indicated a range of $74 to $78 per share, according to the SEC document. At the time, CDW's shares were trading at approximately $62 per share.

During the next two months, CDW reported solid earnings and its shares increased to more than $70 per share. On May 2, CDW received four letters of interest again. Two of the letters were between $78.50 and $80 per share. A third was for $81 to $83 per share, and Madison Dearborn offered $84 to $86 per share.

A week later, CDW reported April sales results and shares increased to $79.61, up 8.5 percent compared to the previous trading day.

In late May, Madison Dearborn increased the offer to $87 per share. CDW's board responded by asking for $89 per share. Madison Dearborn countered with $87.75 per share on May 28 and the deal was done.