Rexel’s Winning Bid For Hagemeyer Includes Sale Of U.S. Branches To Sonepar

Nov. 21, 2007
After rejecting unsolicited bids from two of the world’s largest electrical distributors, Netherlands-based Hagemeyer agreed to a sweetened $4.55 billion buyout by Rexel, Paris.

After rejecting unsolicited bids from two of the world’s largest electrical distributors, Netherlands-based Hagemeyer agreed to a sweetened $4.55 billion buyout by Rexel, Paris.

Rexel and Hagemeyer said in a statement they would enter exclusive negotiations to discuss selling Hagemeyer’s American, Asian-Pacific and certain European businesses to Paris-based Sonepar. More than half of the sales Sonepar would get from Hagemeyer’s businesses are in North America.

Hagemeyer North America, headquartered in Charleston, S.C., has operations in Canada, Mexico and the United States. In January 2001, Hagemeyer announced the integration of its three primary U.S. operating entities (Cameron & Barkley Co. (CamBar), Tristate Electrical & Electronics, and Vallen Corp.) into a single operating company named Hagemeyer North America. The company acquired Tristate, Hagerstown, Md., and Vallen, Houston, a safety-products distributor, in 1999; and CamBar, Charleston, S.C., in 2000.

Although Sonepar USA already has branches throughout much of the East Coast, the Hagemeyer branches would fill some key gaps in its coverage. Tony Burr, president of Sonepar USA, told Electrical Wholesaling in July 2007 that the company wanted to build its presence in the Carolinas. Hagemeyer’s operations in North Carolina and South Carolina (including the former CamBar business in those states), would help fill that gap. Sonepar would get several locations in South Carolina, where it previously did not have branches. Sonepar would also have a new presence in North Carolina through Bryant Electric Supply Co. Inc., Lowell, N.C., which Hagemeyer acquired in August 2007. Bryant was merged with Hagemeyer’s Carolinas business unit. With 104 employees, five branches and $50 million in annual revenue, 60-year-old Bryant Electric Supply ranked as the nation’s 145th largest electrical distributor, according to Electrical Wholesaling magazine’s 2007 Top 200 listing. The company has branches in Charlotte, Laurinburg, Lowell, Hickory, N.C., and Rock Hill, S.C.

Sonepar would also get additional branches in Maryland, West Virginia and western Pennsylvania through Tristate Electrical and Electronics Supply Co., Hagerstown, Md., which Hagemeyer acquired in 1999. These branches would seem to fit geographically with the company’s coverage of eastern and central Pennsylvania (through its Friedman Electric business and New Jersey, through its Cooper Electric Supply operations.)

Rexel would retain most of Hagemeyer’s Professional Products & Services activities in the Baltic countries, Belgium, the Czech Republic, Finland, Germany, Ireland, the Netherlands, Norway, Poland, Russia, Slovakia, Spain and the United Kingdom. The resulting increase to Rexel’s sales, on a 2006 pro-forma basis, is estimated at about $5.2 billion.

Rexel made a $4.3 billion hostile bid for Hagemeyer in the last week of October. The bid came a few weeks after Sonepar made an unsolicited offer to buy Hagemeyer for $3.5 billion. Hagemeyer’s management rejected both bids as too low and unsolicited.

Before adding Hagemeyer, Rexel had $13.4 billion in international sales, and more than 25,000 employees working in 1,900 branches in 29 countries.

Sonepar has more than $12.4 billion in international sales, and more than 22,000 employees working in 1,330 branches in 29 countries.

Hagemeyer, which posted sales of about $8.7 billion in 2006, is a dominant player in the United Kingdom and certain other areas of Europe.