In an Acquisitive Mood – Crescent, WESCO, Cooper, CDR

Recently there have been a number of acquisitions in the electrical industry, of which a number are noteworthy.  Acquirers have included Crescent Electric, WESCO, Cooper Industries, and Clayton Dubilier & Rice (yes, the people who used to own WESCO and now also partly own Rexel and HD Supply).

1. Last month, Crescent purchased the Missouri division of Broken Arrow, which it renamed BA Electric Supply.  This was interesting for two reasons:
• It is Crescent’s first acquisition since it was announced that Dennis DeSousa, ex-Graybar, and in charge of acquisitions, joined the company.
• More interestingly, BA Electric Supply (which is now owned by Crescent) is staying in IMARK, meaning Crescent has 3 branches in IMARK.  Could this be a precursor of more to come? It’s interesting that IMARK now has components of two national chains as members (U.S. Electrical is affiliated with CED). For an organization that was committed to independent distribution, the definition of “independent” appears to be, shall we say, “flexible”. It seems like the member-owners like to have everyone under the same roof.
2. WESCO expanded its horizons and purchased TVC Communications from a private equity firm.  A couple of reasons why this is interesting is that:
• They paid $246.5 million for a $300 million company, essentially 82% of sales.  Typically, most electrical distribution deals go for 20-25% of sales, so this says that this type of datacom distributor is much more profitable or WESCO overpaid (I’m betting on the former.)
• Combined with WESCO’s purchase of CSC a couple of years ago, it appears that WESCO is seeking diversification, additional products to sell to contractors and industrial accounts and another area to compete with Graybar and possibly Anixter.
3. Cooper Industries made a few acquisitions
• HERNIS Scan Systems AS which closed circuit television (CCTV) systems for use in harsh and hazardous environments and presumably will benefit from Crouse-Hinds and is a further indication that security and industrial are strong markets.
• Mount Engineering plc, a United Kingdom based manufacturer of specialty threaded adaptors and reducers for harsh and hazardous environments, and Apex Lighting Controls Ltd., a private manufacturer of Energy Management lighting controls also based in the UK. It’s interesting to note that these were all UK / Ireland acquisitions that will also bring product benefits to the U.S.
4. CDR, the private equity company that counts Rexel and HD Supply amongst its holding acquired 51% of the Tyco division that includes Allied Tube & Conduit.  Typco was planning an IPO of this group. Reportedly some reps had been nervous regarding the IPO (don’t know why).  One thing we know, CDR likes the electrical industry.

What do you think is next regarding distributor or manufacturer acquisitions? What do you think of these recent deals?