Now, Zell is teaming up with former Anixter President and CEO Bill Galvin to build a new business. With a name that won’t win any branding awards—Equity Distribution Acquisition—the company aims to gobble up businesses in a fragmented but huge distribution market, estimated at about $2.5 trillion, according to the prospectus. For its first deal, it plans to identify a target company with a combined debt and equity value of $1 billion to $1.5 billion.
Blank-check companies—also known as special purpose acquisition companies, or SPACs—have become a trendy way to raise money these days. They’re corporations without any operating assets that sell their shares in an initial public offering, using the money raised to go out and buy one or more businesses, almost like an investment fund would. Billionaire investor Bill Ackman recently raised $4 billion for the largest blank-check company ever. Even former U.S. House Speaker Paul Ryan is getting into the game as chairman of a planned SPAC called Executive Network Partnering.
A spokeswoman for Zell did not respond to requests for comment. With a fortune that Forbes estimates at $4.7 billion, the Chicago investor is best known here for his three public real estate investment trusts: Equity Residential, which owns apartments; Equity LifeStyle Properties, which owns mobile-home parks; and Equity Commonwealth, an office landlord.
Though the pandemic and recession has hit some commercial property sectors hard, Zell’s three REITs have avoided serious trouble so far. Equity Commonwealth is sitting on $3.4 billion on cash, hunting for big distressed investing opportunities as weaker landlords drown in debt due to the depressed market.
Outside of real estate, Zell has invested recently in a small North Carolina-based biotech company called Novalent that’s developing a disinfectant it says can decontaminate surfaces for as long as 90 days.
As chairman of Anixter, Zell, 78, orchestrated the company’s $4.5 billion takeover in June by Wesco International, a Pittsburgh-based industrial distributor. Zell, who had served as Anixter’s chairman since 1986, owned nearly 11 percent of the company and received more than $360 million in the deal, according to an SEC filing.
Zell aims to build his fortune further with his new company, seeing big opportunities in the distribution market.
“We believe the rapid pace of change, accelerated by increasing proliferation of technology, will drive a wave of consolidation within the industry,” the company says in its prospectus. “Furthermore, in order to keep pace with larger competitors, smaller players are under pressure to make material investments in technology, requiring significant financial resources and management expertise. We intend to focus on companies that have the ability to competitively differentiate themselves based on a combination of service, technology, innovation and/or market position.”
The company plans to list its shares on the New York Stock Exchange. News of its IPO was first reported by Renaissance Capital.