If you know the companies involved, the speed with which they move shouldn’t surprise anyone. But it was just a few weeks ago that word first came through about the formation of EDGE, Electrical Distribution Global Enterprise, by a group of 11 electrical distributors interested in expanding their work outside the North American market. Now comes the announcement that they’ve made their first acquisition. EDGE announced this week that it’s acquired a majority interest in a Brazilian industrial and electrical distributor.
EDGE Investment Partners LLC said it has acquired a majority interest in Ladder Automação Industrial LTDA, which operates primarily in the Brazilian states of São Paulo and Rio de Janeiro. Ladder is an authorized distributor for Belden, Cognex, Comtrol, Data-Linc Group, Fluke, Fluke Networks, Panduit, ProSoft Technology, Rockwell Automation, Rockwell Software, Shimpo and Tektronix.
This is an understandable fit for the 11 original EDGE partners, all of whom carry Rockwell Automation as their industrial automation line.
The deal began to take shape long before the formation of EDGE. Two years ago, Elaine and Heather Gerrie, co-presidents of Gerrie Electric Wholesale International, Burlington, Ont., began to seek partners for international expansion and, after also visiting China and India, settled on Brazil as their best opportunity, Elaine Gerrie told Electrical Marketing.
“We felt it was a good fit, with the economy there, the potential, it’s just what we see as good future for us,” Gerrie said. “Then we got involved with EDGE, in its formation, and so turned the acquisition over to the EDGE group. That’s how Brazil ended up being our first acquisition, because Heather and I had already started down the path.”
The Ladder headquarters in São Caetano do Sul, its branch locations in São José dos Campos and Sorocaba and its Rio de Janeiro branch are included in the acquisition. Additional branch locations will be considered as a part of the growth plan for the business, EDGE said in a release announcing the deal.
As the industrial market in Brazil continues to grow, the demand is increasing for electrical distributors to fill the supply chain and technical value-add needs of customers, said the EDGE release, and the EDGE members see an opportunity to contribute their experience to accelerate the capabilities of potential partner companies like Ladder to serve those needs.
The acquisition of a majority stake retains the benefits of a partnership for the EDGE members and the local company, Gerrie said. EDGE won’t structure all deals this way, but will evaluate them individually.
“It’s a partnership in the sense that we just bought a majority interest in Ladder. The principals of Ladder are still involved and they still have a minority stake in the company,” she said. “So we’ll leverage their market knowledge and capabilities along with their staff and how they operate, and then bring in our North American piece where we think it will be a good fit for them to help them expand at a customer or in a particular market and find ways to leverage what we do best and what they do best and put it together.”
After Aug. 1, when Bob Eisenbrown takes his seat as the CEO of EDGE, the deals and the management of the relationships with the partner companies will become his domain, Gerrie said. Eisenbrown will answer to a four-person elected board of managers initially consisting of John Burke of Kirby Risk, Paul McCool of Revere Electric Supply, Don Slominski of McNaughton-McKay and Walt Reynolds of the Reynolds Co.
EDGE Investment Partners is a Limited Liability Corporation developed and owned by a group of North American based distributor members. The focus of EDGE is to build a network of distribution company partners outside of North America. The members have agreed that EDGE will not go after acquisitions within North America.
The founding members of EDGE are French Gerleman Electric Co., Gerrie Electric Wholesale International Inc., Horizon Solutions LLC, Kendall Electric Inc., Kirby Risk Corp., McNaughton-McKay Electric Co., North Coast Electric Co., Revere Electric Supply Co., The Reynolds Co., Van Meter Industrial Inc. and Werner Electric Supply Co.