Technology IPO: CDW Files to Raise $642 Million

Direct marketer CDW, which is owned by Madison Dearborn and Providence Equity, has filed for an initial public offering to raise up to $641.7 million, according to S-1/A papers filed with the U.S. Securities and Exchange Commission (SEC).

The company, which plans to list on the NASDAQ under CDW, is offering 27.9 million shares at an estimated maximum price of $23 per share, according to SEC documents. CDW plans to sell 23.25 million of the shares in the offering, while Madison Dearborn and Providence Equity will sell 4.65 million. Madison Dearborn’s stake in CDW will slide to 38 percent and Providence ownership will fall to 34 percent after the offering, records show.

For the first three months of 2013, CDW rang up $2.4 billion in sales and $28.3 million in net earnings, according to the SEC filing.

Reports surfaced in March that CDW planned to go public, following a spate of rumors that swirled around two years ago that its private equity owners were looking to cash out of their deal. CDW returned to a privately held company in 2007 when Madison Dearborn and Providence Equity engineered a $7.3 billion buyout in what turned out to be a market bubble transaction that occurred immediately prior to the 2008 market collapse. At the time, CDW boasted a solid, growing sales line, was cash-rich and debt-free and its stock was sailing along at an eight-year high—not nearly the profile of company looking for a private equity buyout.

CDW has boosted year-end 2010 sales from $8.8 billion to $10.1 billion in 2012, posting net income of $119 million, including a $10.5 million after-tax debt refinancing and repurchasing charge, according to the company’s recent financial disclosure. In the last five years, or since Madison Dearborn took the DMR private, its debt less cash declined $4.60 billion to $3.73 billion.

The 29-year-old CDW claims a customer list of some 250,000 entities in commercial, government, education, healthcare, SMB and consumer segments. The company, which employs 6,800 people in 25 locations in North America, positions itself as a business-to-business provider of IT solutions and technology services.