Sonepar Scores Big … and Other September Acquisitions

September was a busy month for Sonepar and shared insights into an evolution of Sonepar in the U.S. and potentially communicated a message to Rockwell distributors.

And these were just two of the deals done this month.

• Sonepar #1 – Sonepar, with over $21B in sales, acquired Routeco, a $175 million dollar Rockwell distributor with most of its operations in the UK and some business in Austria and the Netherlands. Aside from continued diversification from the European continent, where the economy is stagnant, at best, it also shows the relationship that Sonepar has with Rockwell.  From a U.S. viewpoint, considering potential acquirers, and the valuation of many Rockwell distributors, Sonepar, along with some independents, may be viewed as preferred acquirers by Rockwell rather than some other national chains.
• Sonepar #2 – After announcing Routeco, Sonepar made another diversification play, this time in the U.S. with its acquisition of Industrial Distributor Group (IDG).  IDG is an industrial distribution distributor that was a public company, was purchased by a private equity firm in 2008 with revenues of about $500M for $118.5M and had 2013 revenues of $734M.  Of interest is that the company has 42 locations throughout the U.S. and over 170 on-site customer locations worldwide.  This becomes an interesting expansion of Sonepar’s reach into a customer’s spend. The on-site locations create opportunities to pursue the electrical business and Sonepar’s electrical operations can introduce industrial supplies.  Plus this is an expansion of the Hagemeyer North America.  Reportedly WESCO was interested in IDG but was outbid and, in looking at WESCO’s most recent acquisitions, aside from EECOL, it’s evident that WESCO seeks diversification (and probably would like to take a run at MSC or stitch together an industrial supplies network).  This acquisition also could generate ideas for other Rockwell and industrially-oriented distributors.
• Border States – A few weeks ago Border States acquired Western Extralite.  The culture of the two ESOPs are very complementary and the territory was a natural extension for Border States.  Knowing some of the players, not surprised that they connected as it’s a natural fit.
• Hunzicker Brothers – Hunzicker, based in Oklahoma City, acquired four branch SESCO, expanding its reach in Oklahoma.  We wouldn’t be surprised to see more deals in the oil / gas patch given the revenue and profitability growth in this vertical segment (especially as some owners don’t have succession alternatives) or companies in these areas seek investment of their funds outside their area.

And lastly, on the manufacturer front, while not an acquisition, Philips‘ announcement that it was splitting into two companies with Lighting being a standalone company could be a very good move. The big beneficiary is that Philips may gain strategic stability especially as it relates to its sales organization, which has been known to have “strategy du jour.” With the competition in lighting (fixtures and LEDs), this should help Philips compete more effectively.

As we enter the last 3 months of the year, what are your expectations of the acquisition market? More? Only a few? None?