Expanding its San Francisco Bay area presence, northern California industrial distributor Buckles-Smith Electric Co., San Jose, Calif., has signed an agreement to acquire Electrical Materials Inc., Palo Alto, Calif.
Buckles-Smith, with four locations in northern California, does approximately $40 million to 45 million in sales per year. Buckles-Smith is listed among the top 150 on Electrical Wholesaling magazine's “250 Biggest” listing.
Electrical Materials, a one-house distributor, shares with Buckles-Smith an emphasis on the industrial MRO and OEM market.
Art Cook, president of Buckles-Smith, said that the primary reason for the acquisition was to give his company a physical foothold in the San Francisco Bay peninsula.
“It's an area where we don't have a physical presence,” he said. “We have locations in the south bay and several locations in the east bay, but we did not have any locations on the peninsula.”
Cook said that although Buckles-Smith has had customers in the peninsula, this acquisition will help the company capture more of that market, as well as better serve its customers in that area.
“This will only enhance our ability to provide a higher level of service to those customers, because we have been serving them out of the south bay.”
Craig Kelsey, president and chief executive officer of Electrical Materials, said thanks to this acquisition, his company's 13 employees will be able to capitalize on economies of scale that are increasingly apparent.
“It's more and more difficult for a single independent distributor to survive,” Kelsey said. “I've always maintained an excellent profit margin, which Buckles-Smith is very interested in. (But) we've had more problems in the cost containment area. Insurance — health care — in this area, for a company with 13 people, you pay the top price.”
He added that this acquisition was an exit strategy he had envisioned for his company for some time.
Cook described the fact that both companies are IMARK distributors as “icing on the cake,” and added that Kelsey's role as one of IMARK's board of directors will only enhance his new position with Buckles-Smith.
“Craig will continue in his capacity as board member of IMARK, and will manage a lot of our IMARK activities that we do within the Buckles- Smith corporate entity,” Cook said.
He added that both Kelsey and Electrical Materials will still play an integral role in serving the customers in the peninsula.
“(Kelsey) brings a lot of skills, a lot of experience, he knows the customers and the suppliers and the organization and the operation. The customer still gets the advantages of dealing with the local people they've dealt with for 42 years, and the behind-the-scenes infrastructure has been enhanced significantly by the acquisition of Buckles-Smith.”
Cook said that he had been seeking a San Francisco peninsula expansion for quite some time, and that he had other areas in mind as well.
“There are several other locations we're looking to expand into. We'll either open up new branch locations or if we're fortunate enough to find somebody who happens to be in our served market, we'll probably have more acquisitions along these lines around northern California.”
Cook said Electrical Materials will not immediately change its name.