Billows, Sonepar, CBT and Rexel in Acquisition News

Distributor acquisitions continue to occur.

In the past few weeks there were three acquisitions of note, each with different rationale:

Billows Acquired by Sonepar

June started with a bang with the announcement that Billows Electric was sold to Sonepar. The “bang” wasn’t that Billows was sold, as this had been rumored in the local market for awhile, but being sold to Sonepar was the surprise. Reportedly at least two other national chains pursued the company and wanted entry into the greater Philadelphia / southern New Jersey marketplace.

The deal is expected to close the end of June and Jeff Billows will be transitioning out of the company shortly thereafter.

Billows’ revenues were approximately $240-250 million based upon 2021 EW Top 150 ranking and factoring in projected 2022 growth. Reportedly a “losing” bid was in the 8.1-8.5 EBITDA range with Sonepar paying a significant premium.

The question then becomes “why”, and this is important as others looking to sell should understand that what Sonepar paid is not the new benchmark. Sonepar, assumingly, is anticipating significant synergies. The company owns Cooper Electric and Friedman Electric.

While the letter sent to suppliers stated that “Billows will continue to operate under the Billows name”, many doubt this will be long-term. The letter further mentions that Sonepar is present in all 50 states and has over 450 locations.

This deal was for the Cooper operating company, which, again, according to the supplier letter, has 55 locations in New Jersey, New York and Pennsylvania.

Billows will presumably benefit from the new Cooper CDC’s efficiencies. Further, while nothing has been said publicly, could there be back-office synergies? Personnel synergies? Inventory synergies? It is a fair assumption that Sonepar’s rebates are “better” than Billows’ (and AD’s). Perhaps some purchasing benefits? And, with the combined companies serving the same market, future pricing power? Margin benefits? Perhaps some branch synergies? Definitely some technology benefits. Sonepar dollarized the various operating leverages it has to increase its acquisition price to make a strategic acquisition and pick up significant share in the marketplace.

CBT Expands into Kentucky

CBT acquired Crush Bearings.

Cincinnati-based CBT, a Rockwell distributor that is a very diversified company, acquired Crush Bearings and Drives which is based in Lexington, KY.

Crush sells electrical, bearings, belts, mechanical power transmission and motion control products. Crush has locations in Lexington and Louisville.

This deal expands CBT’s geographic reach while also reinforces the company’s diversification, which will be further enhanced.

Rexel Acquisition is a Diversification Play

And while not in the US, at least yet, Rexel announced that it acquired an HVAC distributor in the Netherlands to expand its efforts in the electrification market.

The acquisition, which was a significant investment (about 300 million euros), was a distributor (Wasco) that was owned by a private equity firm. And, coincidentally, a growing number of US-based HVAC acquisitions have been done by private equity firms.

Could Rexel look to enter the HVAC industry here in the US? It could be a good fit with its contractor-focus.

And speaking of Rexel’s expansion efforts, Rexel is opening two new locations and a distribution hub in Ireland under its Kellihers name. The company already has 24 locations in country.

Three acquisitions. Three different reasons …

• Market share
• Geographic expansion
• Product and customer diversification

Whose next?