Rexel Acquires Five Distributors In Czech Republic And Australia

Oct. 22, 2004
Rexel SA, the largest electrical distributor in the world, announced this week that it had agreed to buy five companies in Central Europe and Australia.

Rexel SA, the largest electrical distributor in the world, announced this week that it had agreed to buy five companies in Central Europe and Australia.

In the Czech Republic, Rexel acquired Bestel and Elvo. In Asia-Pacific, Rexel agreed to buy the Australian electrical distributors Hitech, A-P Controls and Robtec. The company said the acquisitions strengthen its commercial position in two of its fastest-growing markets.

News of the acquisitions comes just a week after reports surfaced that Rexel’s Paris-based parent, French retailer Pinault-Printemps-Redoute SA (PPR), was getting closer to selling Rexel. (See EM, Oct. 8, 2004). A Sept. 27 Reuters report said five groups of private equity firms are expected to submit indicative bids upwards of $2.1 billion for a majority stake in Rexel SA.

A Rexel spokesperson in Paris said the company had no official comment on the report of the investment bankers, but she did say, “The process of the sale is in the active phase.”

She added that the company is exploring all strategic options. Rexel’s acquisitions of Elvo and Bestel strengthen Rexel’s position in Central Europe, where the company has been active since 1994 and generated 2003 revenues of $217.6 million through a network of 60 branches. Rexel recorded its strongest growth rate in the first nine months of 2004 in Central Europe.

Rexel said its acquisition of Elvo makes it the largest distributor in the fragmented Czech market. Integrating Elvo, which has a customer base primarily comprised of contractors, will bolster its position in the construction market in a fast-growing region, the company said. This acquisition is subject to approval by the competition authorities of the Czech Republic. In 2003, Restel and Elvo had revenues of $46 million, generated through 10 branches.

The acquisition of automation specialists Hi-Tech, A-P Controls and Robtec strengthens Rexel’s position in the Australian industrial market, which enjoys significant growth potential. The new companies will also enable Rexel to broaden its coverage of the Brisbane and Sydney regions, where Rexel had acquired Freeon, another company serving industrial clients, in 2001.

Rexel said it’s the largest distributor in the Australian market, where its revenues in the first nine months of 2004 grew by 6.3 percent on a comparable structure. In 2003, Rexel had revenues of $341 million in Australia through a network of 190 branches.

“We are delighted to welcome Bestel, Elvo, Hitech, A-P Control and Robtec within the Rexel family,” said Jean-Charles Pauze, Rexel’s chief executive officer. “The prominent position of each of these companies in its respective market will strengthen our group. We are implementing a selective external growth strategy, targeting the most dynamic markets, where the strengthening of our market share goes hand in hand with the expansion of our operating margins.”

The three Australian companies joining Rexel had combined 2003 revenues of $16.2 million through three branches.

Rexel has 280 locations and 4,400 employees in the United States, and had 2003 annual U.S. sales of $1.9 billion, according to Electrical Wholesaling magazine’s 2004 Top 200 listing. Rexel SA has 1,700 branches and 21,300 employees in 29 countries and approximately $8.2 billion in 2003 annual sales.

The company’s U.S. year-to-date sales through Sept. 30 are up 7.4 percent to approximately $1.5 billion. Its Canadian sales for the same period increased 3.8 percent to $246.6 million.