Electrical Consolidation Sparks Fly

The consolidation race continues in the electrical industry. Recent distributor deals inclued State Electric purchasing Shepherd Electric, Rexel purchasing Tr-Valley, Sonepar (NEED) buying Ralph Pill and most recently Kendall Electric reaching down south to buy Roden. And it is probably not done as we’ve heard that Rexel is positioned for a couple of more this summer and that USESI has been rebuffed by a few distributors lately. Sonepar continues to be on the hunt.

Pill was able to find someone in the market who didn’t need their downtown facility (NEED has a RDC in Canton, MA) so that the family can retain the real estate, and was willing to sign long-term leases for the branch locations. This acquisition significantly extends NEED’s reach in New England. A good strategic acquisition.

The Kendall deal is probably the most unique given their territory expansion. While Roden probably had limited suitors due to its Rockwell affiliation (need to be “blessed” which would reduce the field to only Rockwell distributors – possibly Sonepar (Irby), CED (doubtful), or other large independents like McNaughton-McKay or Reynolds), coming down from the upper Midwest was a surprise. Don’t know the rationale but it good be on opportunity for geographic diversity (economy in MI is challenging from what we understand), synergies with the automotive industry in the Alabama area, or a financial play for this ESOP company. Will be interesting to see who ends up running the Roden division…will the McCamy’s stay long? Don’t know the selling price, but with deals going for typically 27-32% of sales, and Roden being a “quality, high profit (as defined by PAR) company, expect a slightly higher percentage.

Manufacturers haven’t been quiet either. Thomas & Betts made two acquisitions of which the Jostlyn deal may benefit some electrical distributors. The Rio Tinto/Alcan deal is a blockbuster and probably won’t have any change on the electrical industry (although Rio TInto probably needs to generate savings so Alcan may look to cut some costs).

Activity over the past 30 days could mean for an active summer!