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Distributors Look to Niches for 2014 M&As

Dec. 5, 2014
On the M&A front, 2014 will be remembered not for an overwhelming number of acquisitions of electrical distributors or the size of any of the deals, but for the tight focus many acquirers had on industries like oil and gas, lighting, automation, electric utilities, security and safety products.

On the M&A front, 2014 will be remembered not for an overwhelming number of acquisitions  of electrical distributors or the size of any of the deals, but for the tight focus many acquirers had on industries like oil and gas, lighting, automation, electric utilities, security and safety products.

The only deals involving Top 200 electrical distributors at press time were Border States Electric’s purchase of the highly regarded Western Extralite Co., Kansas City, Mo., and the merger between Granite Electrical Supply Inc., Sacramento, Calif., and Electrical Distributors Co., San Jose, Calif., to form Edges Electrical Group. WESCO Distribution Inc., Pittsburgh, Pa., has often focused on niche markets like voice-data-video (VDV), utilities or integrated supply with its acquisitions, and this past year was no different with its purchases of utility specialists Hi-Line Utility Supply Co., Elgin, Ill., and LaPrairie Inc., Newmarket, Ontario. Other examples of this niche focus include the acquisition by Anixter International, Skokie, Ill., of 60-location Tri-Ed Distribution, Woodbury, N.Y., which bills itself as the largest distributor of security products in the United States; the move by Shealy Electrical Wholesalers, West Columbia, S.C., to bolster its position in the Carolinas’ lighting market with its purchase of Charlotte, N.C.-based Nova Lighting, a lighting specialist that focuses on high-end lighting jobs in the commercial, industrial, retail, municipal and institutional niches; and Sonepar’s acquisition of IDG Group, Belmont, N.C., a giant in the MRO and integrated supply market with $700 million in annual sales that Modern Distribution Management ranks as the 22nd largest industrial distributor in the United States. For more distributor acquisitions see the chart below.

In the global market, Sonepar and Rexel increased their focus on oil & gas and automation markets with acquisitions in Brazil, Latin America, Australia and the South Pacific. While the two largest distributors in the world are best known in the United States for their acquisitions of dozens of family-owned distributors over the past few decades, during 2014 their attention globally was squarely on distributors focused on the oil & gas and automation markets. Sonepar SA, Paris, bought several Rockwell Automation distributors, including Routeco Group Holdings, the largest automation distributor in Great Britain; Singapore’s HoST Pte Ltd., said to be the oldest Rockwell Automation distributor outside of North America; and Melexa, Bogota, Colombia; as well as distributors in Australia, Canada, the Czech Republic, Costa Rica and Germany. Rexel was busy, too, with its acquisitions of oil & gas specialist 4 Knights International, Bangkok, Thailand; Beijing Ouneng, a Chinese automation specialist; Elevite, a Swiss lighting specialist; and AL-Hobayb Group, Riyadh, Saudi Arabia, another oil & gas specialist.