Hagemeyer in Play
You may have heard that Hagemeyer received an unsolicited offer from Sonepar and that reportedly Rexel also has some interest. And with Hagemeyer planning to meet with Sonepar to “clarify” the offer, it wouldn’t surprise us to see some type of deal get done in the near future.
While Hagemeyer thinks the offer too low (not surprising since it was an initial offer), using U.S. electrical distribution acquisition parameters, the deal may be fairly valued.
According to Industrial Distribution magazine, Sonepar offered $3.5 billion.
In reviewing Hagemeyer’s posted financials, the company is projected to have about $8.75 billion USD in sales (using a 1.411 exchange rate) with about $1.7 billion in North America (US, Canada and Mexico). Historically, U.S. distributors have sold for 30-33% of revenues, which would generate a sale price of approximately $2.9 billion USD. Accounting for the strategic premium of helping either Sonepar or Rexel get into the industrial and safety markets as well as Hagemeyer’s geographic reach (25 countries), the deal appears fairly valued, unless safety, industrial and non-U.S. revenues are valued significantly differently.
From a U.S. viewpoint, this could be an interesting play for either company. While Hagemeyer’s U.S. electrical business would consolidate market share in the Southeast and MidAtlantic (Rexel has a MidAtlantic division which was primarily Branch Electric and Electric Supply of Asheville, and Sonepar purchased Capital Lighting), the ability to learn from the industrial supplies business as well as the safety business, and then deploy best practices to other branches (or branch expansion), could provide unique competitor for industrially-oriented electrical distributors as well as industrial distributors…both companies could generate the ability to become multi-disciplined distributors.
A deal will probably get done, and with change comes opportunities for all. Does the opportunity to enter into new distribution markets justify a premium?