Rexel’s Acquisition of Platt Electric Bolsters Presence in Northwest and Mountain States

May 25, 2012
In one of the largest acquisitions in years, Rexel has purchased Platt Electric Supply, Beaverton, Ore., the largest regional chain in the Pacific Northwest and Mountain states

In one of the largest acquisitions in years, Rexel has purchased Platt Electric Supply, Beaverton, Ore., the largest regional chain in the Pacific Northwest and Mountain states.

Platt Electric Supply has 1,000 employees at 111 branches in seven states and posted 2011 sales of €310 million in (US$394 million). The company was ranked #13 on Electrical Wholesaling’s 2011 Top 200 listing. Platt has for years been a powerhouse in the Pacific Northwest and over the past few years has expanded into the Mountain states, including Idaho, Nevada, Montana and Utah. It has 31 locations in Oregon; 36 branches in Washington; 21 branches in California; and recently opened a regional distribution center in Salt Lake City, Utah.

According to information on its website, Rexel had two branches in Oregon, one in Washington, and 23 in California, before the acquisition. Brad Green, Rexel’s vice president of human resources and communications, said Rexel’s Gexpro business unit also has branches in Idaho, Nevada, Utah and Washington, but that the Platt acquisition will give Rexel a much larger and denser footprint in the region. He told Electrical Marketing that Rexel doesn’t have any plans for branch consolidations or closures at this time.

Green added that while Rexel’s biggest acquisition in the United States was its purchase of Gexpro (formerly GE Supply) in 2006, the Platt deal is as large as any of its past purchases of other big regional distributors, including Branch Group, Consolidated Electrical Supply and Southern Electric Supply. The transaction, subject to customary conditions, should close in early July and Platt Electric Supply’s operations should be consolidated from July 2012.

A Rexel press release announcing the acquisition said Jeff Baker, president of Platt Electric Supply, will become president and CEO of Platt Electric Supply and will become V.P. of Rexel Inc. He will assume an enhanced leadership role on several key initiatives for the broader Rexel business in the U.S. Harvey and Jay Platt, who led Platt Electric Supply’s senior management team for many years, will be retiring from the business.

The release also said, “Platt Electric Supply significantly reinforces Rexel’s position in the U.S, one of the world’s largest markets for electrical supplies, and strengthens its market share in the Western part of the country. Following this acquisition, Rexel’s market share in this region, which is expected to grow at a faster rate than the overall U.S. market, will exceed 10%.

“This acquisition supports one of Rexel’s top external growth priorities:strengthening its market share in key mature markets where the Group is already present. Platt’s business model focused on organic growth, its strong financial performance, outstanding customer service, experienced and well-trained employees, strong brand recognition and innovative use of technology constitute solid assets on which to build in the future.”

Many people in the industry are talking right now about the purchase price for Platt Electric Supply, which was believed to be at a roughly one-to-one ratio with Platt’s annual sales, a high ratio when compared to other recent deals. The Rexel press release said the acquisition represents an investment of roughly US $377.1 million (enterprise value) for Rexel and will be accretive by the end of 2013.

One industry observer said he believes Rexel is particularly interested in Platt Electric Supply’s regional distribution centers, its well-regarded Platt University training program and in the online storefront it uses to sell products. This storefront draws product information from Platt’s Mincron ERP system. Rexel announced in 2009 that it was moving its entire operations to Epicor’s Eclipse system.

Green agreed that Rexel plans to learn from and adopt some of Platt Electric Supply’s best practices, and said Platt will be able to learn from Rexel as well. “We love the culture, love the business model,” he said. “And we are very impressed with alot of their innovative technologies and their strong employee population. We are anxious to have them as part of the family.”