ACQUISITIONS

12 Months Ended

Dec. 31, 2023

Rahi Systems Holdings, Inc.

On November 1, 2022, through its wholly-owned subsidiary WESCO Distribution, Inc. (“Wesco Distribution”), the Company acquired 100% of the equity securities of Rahi Systems Holdings, Inc. (“Rahi Systems” or “Rahi”). Headquartered in Fremont, California, Rahi Systems is a leading provider of global hyperscale data center solutions with over 900 employees in 25 countries. Rahi's expertise with complex information technology projects and global presence strengthen Wesco's data center solution offerings. Wesco Distribution funded the purchase price paid at closing with cash on hand as well as borrowings under its accounts receivable securitization and revolving credit facilities.

The total fair value of consideration transferred for the acquisition of Rahi Systems consisted of the following:


	(In millions)
Purchase price	$	217.0
Adjustments to purchase price	25.9
Total cash consideration	242.9
Extinguishment of Rahi Systems obligations	12.6
Total purchase consideration	$	255.4
Supplemental cash flow disclosure related to acquisitions:
Cash paid for acquisition	$	255.4
Less: Cash acquired	(68.6)
Cash paid for acquisition, net of cash acquired	$	186.8

The purchase consideration was allocated to the identified assets acquired and liabilities assumed based on their respective acquisition date fair value, with the excess allocated to goodwill. The Company identified a customer relationship intangible asset and estimated its fair value using an income valuation method. The excess purchase consideration recorded as goodwill is not deductible for income tax purposes, and has been assigned to the Company's CSS reportable segment, as disclosed in Note 5, “Goodwill and Intangible Assets”. The resulting goodwill is primarily attributable to Rahi’s workforce and cross-selling opportunities in additional geographies.

The estimated fair values of assets acquired and liabilities assumed were based on preliminary calculations and valuations using estimates and assumptions at the time of acquisition. During the fourth quarter of 2023, the Company finalized its allocation of the purchase consideration to the respective fair values of assets acquired and liabilities assumed in the acquisition of Rahi. As the Company obtained additional information during the measurement period, it recorded adjustments to its preliminary estimates of fair value, which were as of November 1, 2022. As presented in the table below, the net impact of these measurement period adjustments was an increase to goodwill of $0.9 million.

The results of operations of Rahi Systems are included in the consolidated financial statements beginning on November 1, 2022, the acquisition date. For the years ended December 31, 2023 and 2022, the Consolidated Statements of Income and Comprehensive Income include $543.9 million and $111.5 million of net sales, respectively, and an immaterial amount of income from operations for Rahi Systems. The Company has not presented supplemental pro forma revenue and earnings of the combined business as the acquisition of Rahi Systems is not material to Wesco's consolidated financial statements.

The following table sets forth the allocation of the purchase consideration to the respective fair values of assets acquired, liabilities assumed for the acquisition of Rahi Systems:


	Preliminary Fair Value Estimates(1)		Measurement Period Adjustments		Final Purchase Price Allocation(1)
Assets	(In millions)
Cash and cash equivalents	$	68.6	$	—	$	68.6
Trade accounts receivable	52.6		—		52.6
Inventories	49.4		19.6		69.0
Intangible assets(2)	105.8		—		105.8
Goodwill	97.4		0.9		98.3
Other current and noncurrent assets	41.1		6.4		47.5
Total assets	$	415.0	$	26.9	$	441.8

Liabilities
Accounts payable	$	58.0	$	28.0	$	86.0
Operating lease liabilities	20.1		—		20.1
Deferred income taxes	25.0		(7.2)		17.8
Other current and noncurrent liabilities	56.4		6.1		62.5
Total liabilities	$	159.5	$	26.9	$	186.4

Fair value of net assets acquired, including goodwill and intangible assets	$	255.4	$	—	$	255.4

(1) The preliminary fair value estimates are as of November 1, 2022. As disclosed above, the Company finalized its purchase price allocation during the measurement period.

(2) Consists of a customer relationship intangible asset with an estimated weighted-average useful life of 17 years.

Canadian Divestitures

On August 6, 2020, the Company entered into a Consent Agreement with the Competition Bureau of Canada regarding the merger with Anixter International Inc. (“Anixter”). Under the Consent Agreement, the Company was required to divest certain legacy Wesco utility and data communications businesses in Canada, which had total net sales of approximately $110 million for the year ended December 31, 2020. In February 2021, the Company completed such divestitures for cash consideration totaling $56.0 million. The Company recognized a net gain from the sale of these businesses of $8.9 million, which is reported as a component of selling, general and administrative expenses for the year ended December 31, 2021. These dispositions fulfilled the Company’s divestiture commitments under the Consent Agreement and the net cash proceeds were used to repay debt.