Sonepar’s Quest for $1 billion per OpCo

Within the past couple of year’s Sonepar USA set an objective of $1 billion per OpCo (operating company). Whether the goal came from corporate or from US headquarters, the company is well on its way to achieving its goal in the very near future.

Perhaps unbeknownst, the initiative may have started when Sonepar quietly merged the Cooper Electric and Friedman Electric brands. It was a natural evolution given the adjacency of the businesses … New Jersey and Northeast Pennsylvania. It would not surprise me to see the same occur with Billows Electric in the next year or two given the proximity of Cooper and Billows and, more importantly, the operational and human synergies. Plus, this is how the company could capitalize on its investment. They can gain better utilization of their 1,000,000 square foot CDC, gain marketing synergies, unfortunately rationalize some back-office personnel and possible benefit from location duplicity (and determine which branch location has a better footprint, locale, or lease.)

The ”blending” model then occurred with North Coast and Eoff on the west coast.

This was followed, in June, with Irby being segmented with the electrical operations being rebranded under Crawford Electric and Irby’s utility division, which is the #2 or #3 utility distributor in the US, as a standalone business. Crawford had exceeded $1 billion in the fall of 2022.

And then earlier in the year Springfield Electric spread its wings and is becoming the brand that encompasses Springfield Electric, Holt Electric, Richards Electric and

Sonepar announced earlier this year that OneSource exceeded the $1 billion mark, followed by an announcement that Capital Electric had done the same.

So, now we come to some others that appear to be doing it a little “differently.”

Late last month there was an staff meeting at Independent Electric where it was revealed that, essentially, the Independent brand was being sunsetted. The IE California brands would become One Source locations, the Arizona locations would be rebranded to QED. The Las Vegas QED branch would move to Codale and IE’s utility brand would move to Irby. NEDCO Supply was integrated into Codale Electric.

From a third-party perspective it appears that Sonepar did not feel that Independent could grow the NorCal business to a $1 billion plus business. Further, this is an opportunity to streamline costs as there inevitably is back-office duplication. Feedback from individuals in the local marketplace shared that staff is concerned and it looking. Some had affinity to the brand, some are in roles that could be duplicative.

Sonepar / World Electric Acquires Electric Supply (ESI) – Tampa

And now World Electric is on its quest for $1 billion, which was a goal for 2025 but could be coming sooner with its recent acquisition of Electric Supply in Tampa. Electric Supply, an IMARK Group member, that had been acquired by private equity firm Supply Chain Equity Partners, was ranked #70 on EW’s Top 150 with estimated revenue of $160-180 million based upon placement on the EW list, grew from a single location to a nine-location distributor via some small acquisitions and some new location openings. ESI also had significant business in the Caribbean, which complements World Electric, as well as utility business in Florida, which will now be rebranded as Irby Utilities.

This acquisition will get World much closer to its goal of $1 billion in Florida and Georgia.

And speaking of Florida, this is truly a chain state now with only a few independents of note with most, if not all of them on the east coast from West Palm Beach to Miami. This has implications for manufacturers, and reps, seeking to have a reasonable market share within the state – manufacturers need to have relationships (and rebates) with these companies (especially to have stocking positions) or their reps need to generate the demand (and maybe a stocking warehouse) so that their product is requested by the customer. Some distributors could market themselves, to their customers and the manufacturing community (or to reps) that they are more “flexible”. It should be an interesting experiment on how small to mid-size manufacturers can succeed in the state … and perhaps a roadmap for how the business may evolve in other geographic areas as distributors are acquired.

The ESI deal represents the 18^th acquisition of the year.

So, $1 billion is achievable … organically, via acquisition, and via internal merging.

On to $2 billion by OpCo?