Acquisition Week

The end of last week was “acquisition” week.

• WESCO acquired NESCO
• Acuity acquired Juno (formerly a division of Schneider Electric and a sister company of Square D)
• Eaton Lighting acquired Ephesus Lighting

Some thoughts and what it could mean:

• WESCO acquired NESCO, a New England-based $115M distributor with 24 branch locations. On the face of it many ask “why NESCO” given that their contractor business is small to mid-sized contractors in many suburban and rural markets … essentially small branches. Further, the company’s gear line is GE and their major lamp line is GE. Doesn’t seem to fit the typical perception of WESCO. But recall that WESCO acquired Hill Country Electric earlier this year and hence started representing Square.

 The “jewel” within NESCO, however, is their national account lighting group which serves retailers such as TJX      Companies. Reportedly, a few years ago, this could have been 50-70% of NESCO’s sales.

  So, this is a diversification play for WESCO. According to New England “rumors”, WESCO has said that it will maintain   their dual GE relationships. Could we see WESCO continue to make diversification plays as it seeks growth            opportunities?

• Acuity’s acquisition of Juno was a surprise to many. Juno is recognized as a quality lighting line. The company has a good name and plays in the architectural residential and commercial market. It is surprising to many that during its 10 year ownership by Schneider Electric that Schneider never found a way to enhance it’s potential and find some ways to generate benefits for Schneider Electric / Square D distributors.  In 2005 Juno’s revenues were $242M. Schneider acquired it for $610M. 10 years later, Schneider sold Juno for $385M and Juno’s 2014 revenues were $230M.

 In the competitive lighting market, according to sources this filled some product holes for Acuity and, perhaps more    importantly, inhibited other significant competitors from making a significant acquisition. Given Acuity’s recent growth  (success), this can only add.  It will be interesting to see how the sales organization gets “rationalized” / streamlined  once the deal is closed.

• It was reported that Eaton Lighting acquired $22M Ephesus Lighting which focuses on the stadium and other high lumen and industrial application markets.  Aside from probably filling a niche (stadiums) which can help for municipal as well as marquee projects, it is interesting that Eaton Lighting is getting more involved in the industrial lighting market. We are hearing from a number of lighting manufacturers that they are starting to pursue the industrial lighting market which they feel is under penetrated. Given the decline in price for indoor / outdoor commercial LED lighting, industrial seems to be another phase in the LED market race.

And we’re hearing about other potential distributor deals before the end of the year … but you never know.

What are your thoughts on these deals? Any surprises?