PITTSBURGH - Wesco International (NYSE:WCC), a Fortune 500 supply chain solutions company, has reached a definitive agreement to acquire Ascent LLC, a data center facility management service provider, for $185 million. The transaction, which is expected to be completed in the fourth quarter, is subject to customary regulatory approval.
Ascent, a privately held company based in St. Louis, Missouri, is recognized for its specialized services in data center facility and property management. The company has reported $115 million in sales over the past twelve months, with a 30% compound annual growth rate over three years. Ascent's offerings range from AI data center design and construction to operations, maintenance, and emergency services. Their proprietary Navigator platform offers clients an integrated dashboard for managing critical data center infrastructure.
John Engel, Wesco's Chairman, President, and CEO, highlighted the acquisition's alignment with Wesco's data center solutions portfolio, emphasizing Ascent's engineering expertise and professional services as key enhancements to Wesco's lifecycle services for data centers. Bill Geary, Executive Vice President and General Manager of Wesco Communications and Security Solutions, pointed out that the addition of Ascent's 330-strong workforce, technology, and customer base in the United States and Canada will bolster Wesco's service offerings, including advanced liquid cooling solutions.
Wesco International, headquartered in Pittsburgh, Pennsylvania, is a leading provider of distribution, logistics services, and supply chain solutions, generating over $22 billion in annual sales. The company partners with premier suppliers to serve a diverse customer base across various sectors, including commercial, industrial, government, education, telecommunications, and utilities. Wesco operates nearly 800 branches and sales offices across more than 50 countries.
This acquisition represents Wesco's ongoing commitment to expanding its comprehensive services in the growing data center market. The information for this article is based on a press release statement.
In other recent news, WESCO International has been the subject of several positive analyst reviews. Wolfe Research reiterated its Outperform rating, highlighting the potential for WESCO to achieve mid-teens operating leverage and an EBITDA margin of around 8% by 2027. The firm also noted WESCO's aggressive approach toward mergers and acquisitions, particularly in the software and services sectors.
Oppenheimer maintained an Outperform rating, raising its price target from $190.00 to $205.00. The firm commended WESCO's strategy of leveraging its leading North American distribution platforms and aggressive digital transformation initiative. Loop Capital also adjusted its price target for WESCO, increasing it to $210 from $190, maintaining a Buy rating on the shares.
KeyBanc Capital Markets sustained its positive stance, reiterating an Overweight rating and maintaining a $195.00 price target. The firm's optimism follows WCC's Investor Day in Chicago, which highlighted the company's strategic positioning to capitalize on strong secular growth trends.
These are recent developments for WESCO International, which has been making significant strides in its business transformation, integrating acquisitions such as Anixter and Rahi Systems, and working toward a 10%+ EBITDA margin goal. Despite some challenges, WESCO generated a record $500 million in free cash flow in the first half of the year, maintaining its full-year free cash flow outlook of $800 million to $1 billion.
InvestingPro Insights
Wesco International's acquisition of Ascent LLC for $185 million aligns well with the company's current financial position and market performance. According to InvestingPro data, Wesco boasts a market capitalization of $9.44 billion and a price-to-earnings ratio of 14.65, suggesting a reasonable valuation considering its growth prospects.
The company's revenue for the last twelve months stands at $21.95 billion, which puts the Ascent acquisition into perspective as a strategic move to enhance its data center solutions portfolio. While Wesco has experienced a slight revenue decline of 1.46% over the past year, the acquisition of Ascent, with its reported 30% compound annual growth rate, could potentially offset this trend and contribute to future growth.
InvestingPro Tips highlight that Wesco has been aggressively buying back shares, indicating management's confidence in the company's future. Additionally, the stock is trading near its 52-week high, with a strong return over the last five years, suggesting investor optimism about the company's strategic direction, including acquisitions like Ascent.
It's worth noting that Wesco's liquid assets exceed short-term obligations, providing financial flexibility for acquisitions and expansion. This solid financial footing, combined with the company's prominent position in the Trading Companies & Distributors industry, positions Wesco well to integrate Ascent and capitalize on the growing data center market.
For investors seeking more comprehensive analysis, InvestingPro offers 10 additional tips for Wesco International, providing deeper insights into the company's financial health and market position.
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