Sonepar – a $10 Billion Distributor?

Last week came news that another independent distributor was sold to Sonepar.  Eck Supply, a 20+ location distributor in southern VA, NC, SC, after selling their Rockwell location to EECO, sold the remainder of the company to Sonepar.  Perhaps it was due to succession concerns, perhaps the money was “too much to resist”, perhaps … But either way, another independent, from an ownership perspective, is now gone.

At the same time, Electrical Wholesaling released its Top 200 list, which is always an eagerly awaited edition of the publication.  And the #1 distributor from a revenue perspective … Sonepar with almost $8 billion!

Which, given their penchant for acquisitions, then begs the question of, when will we see the first $10 billion North American electrical distributor?

This is positioned as North American as it is difficult for EW to segment US vs Canada data from a number of submittals. Additionally, some companies have non-electrical / utility divisions which further muddy the waters, hence it is not possible to do an “apples to apples” comparison.

In an effort to gain some insight, we solicited input from Jim:

• “Sonepar only provided North American sales this year and I don’t believe they include Vallen and IDG in their response.
• Rexel’s sales do include Canada. Tough to say on the Gexpro non-US revenue — I had to go with the data from their corporate website as I didn’t get a direct response from anyone at Rexel this year.
• Anixter’s sales are North American all the way.
• On HD Supply, that’s North American. I should have included the asterisk in the chart. And it is electrical and utility as near as I can figure from their annual report and data on the website. I do think the sales outside the US are small. And I bet some of the other divisions sell some electrical.
• WESCO is North American sales, and it is multi-industry.
• Graybar is also North American… will doublecheck on what the sales figure for rest-of-world. It was pretty small.
• CED estimate includes US Electric and Walters Wholesale.”

Jim does the best he can with the data that survey respondents provide plus his own research.

So, if we say the North American market is between $100-120 billion (includes Canada which frequently is mentioned as 10%, maybe a little more, of the US market), Sonepar could soon be 10% of the market! Which then gets you thinking, “where else do they need to acquire?”

They have most of the east coast (not strong in Atlanta), Perhaps stronger in Houston. Then areas like Detroit, Kansas City, St Louis and selected other markets.

A $10 billion distributor that, for the most part, acts as a number of regional companies.  What advantages does that volume bring? Or does it? Could a $10 billion distributor impact the market in other ways? Can it sustain an organic growth rate?

The top 200 represented about 65% of sales in 2014..  What do you think they will represent by 2017, especially given consolidation?

And at what percent of share do you think Sonepar realistically could max out at?