Granite City and Leviton Make Acquisitions

Could the COVID-19 inspired acquisition cycle starting in the electrical industry?

Last month Dakota Supply acquired Honold & La Page.

Last week two deals, one distributor-focused and one manufacturer-focused, were announced.

Granite Grows

Granite City Electric Supply, one of the largest independent electrical distributors in New England, after months of rumors, acquired Baynes Electric.  According to its press release:

Granite City Electric Supply recently concluded an Asset Acquisition of Baynes Electric Supply, and Baynes and Jones Electric Supply to enhance its position as the leading independent electrical distributor in New England.

The complementary combination of Baynes Electric and Granite City Electric locations creates a broader service network with greater inventory breadth, and delivery options for New England customers. The combined companies will provide more locations for customers throughout southeastern Massachusetts and Rhode Island. With the addition of the Baynes’ four locations, Granite City Electric Supply Company now has a current total of thirty (30) locations throughout New England.

Granite City Electric President Steve Helle and owner Phyllis Papani Godwin wish to extend a warm welcome to the Baynes family and employees. Godwin notes, “this transaction creates future opportunities for mutual growth, personally and professionally, in our combined efforts to serve all customers.

Chris Baynes says he is “looking forward to having our teams combine with the Granite City team to help grow our business throughout the 6 New England states.” He will remain with the company in a senior management role.

Baynes Electric – serving contractors, institutions, national and retail lighting accounts since 1956 – is a well-run family-owned company with a similar approach to building customer loyalty, a strong brand, and a solid distribution channel. Their complementary business philosophies enhance Granite City Electric’s strategic growth goals using GCE The Night Train® Delivery System and delivering over 70 percent of all orders at night.

Granite City Electric Supply Company Inc.—a family-owned and operated, independent electrical distributor—is committed to delivering customer and organizational safety to help prevent the spread of Covid-19 through our proactive approaches in anti-bacterial material handling processes. The culmination of all our stock deliveries are orders delivered after 6 PM, but before 6 AM via our Contact-Free GCE Night Train® Delivery Services.

Granite City Electric Supply was founded in 1923, is headquartered in Quincy, Massachusetts, and is the Official Distributor of Electrical Supplies to the Boston Red Sox.

With its regional distribution center in Taunton, Granite City will be able to optimize the combined organization’s Southeastern Massachusetts operations, making this a win for the company and customers. With Granite City a Schneider Electric premier distributors and Baynes on of the few dual distributors, this is probably a win for Schneider. Granite City also picks up national lighting account expertise. And IMARK picks up a additional revenue.

Now, since Granite City is the official electrical distributor of the Boston Red Sox, just need them to help the Red Sox win! (yes, I am from Boston.)

Leviton Back in Wire Business

Many may remember when Leviton was in the wire and cable business, although on the construction side of the business with American Insulated Wire (AIW) which they sold to Southwire in 2010.

Now they are getting into data communications cable with the acquisition of Berk-Tek.  According to a press release from Nexans, the former owner of Berk-Tek:

Nexans announces today the execution of an agreement to sell Berk-Tek, a leading US based manufacturer of local area network cables, to Leviton.

Christopher Guérin, Nexans CEO: “Our Berk-Tek colleagues will join a long-term partner with the best strategic fit to answer customers demand around connectivity. Together with Leviton, the Berk-Tek team will focus on developing innovative local area network solutions that are critically important in managing the demand of today’s emerging technologies.”

Daryoush Larizadeh, Leviton President: “Berk-Tek is a highly respected North American cabling company with exceptional manufacturing and product development capabilities. By adding Berk-Tek to the Leviton family, we will be able to provide truly end-to-end solutions to our customers.”

This transaction is a natural step in reinforcing the Berk-Tek and Leviton marketing alliance signed in 2013. The combination of both innovative, reliable and service-oriented brands will enable Leviton Network Solutions to offer fully integrated solutions.

Berk-Tek is a leading manufacturer of local area network copper and fiber cables. Berk-Tek’s 350 employees as well as its facilities located in Pennsylvania and North Carolina are expected to move under Leviton ownership before the end of Q3-2020 subject to customary closing conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended.

The transaction entails an enterprise value of US$202 million which represents approximately a multiple of 10x over 2019 stand-alone adjusted EBITDA. Berk-Tek reported sales for US$163 million in 2019.

Leading to the acquisition, Leviton and Berk-Tek had a marketing alliance with a dedicated website.

The Granite City / Baynes deal reportedly was in the works for a while, perhaps timing or an asset acquisition was accelerated due to COVID. Insight for on the Leviton / Berk-Tek deal is unknown. As COVID continues the question becomes, “will there be distributors and manufacturers deciding they don’t want to invest, reinvest and strategize about tomorrow and thereby seek to exit soon (or need to exit soon)?” We’ve heard of companies that are willing acquirers (strategic buyers as well as private equity funds.)  Perhaps These two deals will begin COVID-driven deals?

Congratulations to Granite City and Leviton.