Paris-based Sonepar SA made an unsolicited offer on Oct. 9 to buy Netherlands-based Hagemeyer for $3.5 billion in a move that would make Sonepar the largest electrical distributor in the world. The bid would be completely in cash, the company said in a statement.
Sonepar intends to bid $5.97 a share for Hagemeyer.
Hagemeyer said in an Oct. 9 press release that it had taken notice of Sonepar’s unsolicited offer and its invitation to a meeting to discuss the bid. Hagemeyer said it was “of the opinion that this price significantly undervalues the company.”
“We intend to meet to allow Sonepar to clarify its position,” Hagemeyer said in the press release. At press time, Hagemeyer did not respond to a question from EM about when or where a meeting between the two companies would take place.
Hagemeyer’s stock has risen more than 40 percent in the last two weeks amid speculation of a takeover bid. Rumors centered on the proposed suitor being Rexel. Interestingly, Rexel posted a press release Oct. 9 on its Web site that said, “Rexel notes Sonepar’s intention to launch a public offer on Hagemeyer. In this context, Rexel is reviewing all its strategic options. Rexel will keep the market informed of its decisions.”
Sonepar said it would prefer management to support the offer. An acquisition of Hagemeyer would boost its revenue by two thirds. Sonepar now has more than $12.4 billion in international sales, and more than 22,000 employees working in 1,330 branches in 29 countries.
With $2.4 billion in 2006 U.S. sales, more than 200 locations and 4,200 employees, Sonepar is now the fifth-largest full-line electrical distributor in the United States. The company grew its U.S. sales by 56 percent in 2006 through organic growth and acquisitions.
Sonepar is the largest electrical distributor in Europe and Brazil, and the second-largest distributor in Canada, according to Tony Burr, president of Sonepar USA.
Hagemeyer, which posted sales of about $8.7 billion in 2006, is a dominate player in the United Kingdom and in certain other areas of Europe. It became known in the United States through its 1999 acquisition of Tristate Electrical and Electronics Supply Co. Inc, Hagerstown, Md., and 2000 acquisition of Cameron and Barkley Co. (CamBar), Charleston, S.C. In addition to the electrical market, it has a large position in safety products distribution through its 1999 acquisition of Vallen Corp., Houston.
Should the acquisition be completed, Sonepar would enhance its ability to compete for integrated supply/national accounts against Rexel, its largest rival.
Rexel is one of the owners of the Vantage Group, Crystal Lake, Ill., a provider of global electrical solutions for national-account contracts and the subject of a cover story in this month’s issue of Electrical Wholesaling.
Hagemeyer’s CamBar acquisition gave it access to that company’s integrated-supply contracts, which at that time accounted for a big piece of its total business.
CamBar built its integrated supply business in part through aquisitions of the electrical business of McJunkin Corp., Charleston, W.Va., and 18 locations of Fairmont Supply Co., Washington, Pa.