Late last month it was announced that Meglio & Associates divested of its lighting division, selling it to C&O Sales.

While Meglio represented many lighting lines across the southern Illinois, Missouri, and Kansas marketplaces, its primary line was Genlyte. Genlyte seemingly has a penchant for reps that have a broader territory, and conventional wisdom was that this was the driver of the deal.

Presumably there will be some lighting lines that are duplicate for C&O that will need to find a new home.

But perhaps there is more behind the move?

Meglio Makes Lighting Move

Perhaps the overall business was structured as two companies, perhaps LLCs, under the broader Meglio & Associates, enabling the Lighting division to be easily segmented and sold. If not, it takes some time to undertake separating financials and develop the legal infrastructure to facilitate a sale.

And at the same time, presumably some of the lines had change of clause terms.

From a financial viewpoint, it could have been an opportunistic endeavor. Reps that have lighting divisions report that the commission rate is significantly higher for their lighting business than their electrical material business, however, the net profitability, from a dollar’s perspective, is not necessarily comparable given the higher operating cost for a lighting business due to personnel and other costs … especially if you do not have significant market share or scale.

What’s Next for Meglio’s Electrical Group … the “New” Company?

But then, let’s consider the timing and other industry dynamics, namely Prysmian’s pending acquisition of Atkore, which was announced on August 3^rd and is projected to be finalized on October 7^th at a virtual shareholders meeting.

Based upon Prysmian’s history with Encore and much industry feedback, Prysmian is expected, in at least the vast majority of territories, if not all, to consolidate its acquisition to one rep per territory.

The question for Meglio is “who?”

• Meglio is the Atkore rep in its territory. They do have some wire lines, namely Republic Wire and Service Wire, amongst others.
• Prysmian is represented by Convergence and SMG (Schaeffer Marketing Group)

So, what does this mean for Meglio?

What’s Next for Meglio?

Do they expect …

• For no change in their electrical line card … keep Atkore and their current wire / cable lines?
• Prysmian to move their wire / cable line from Convergence and SMG to Meglio and perhaps Meglio’s wire / cable lines pursue other representation?
• That they may lose the Atkore line with Convergence and Schaefer each picking up Atkore for their territory and perhaps Meglio pursues the independent lines that the others would have to drop?
• To lose Atkore and perhaps sell their electrical division to someone and this be an exit strategy for the principals?
• To facilitate a three-way mega merger between Meglio, Convergence and Schaeffer and divest of overlapping lines, hence picking the “best” of the competing lines (based upon volume, commission rates, easy of doing business and support.)?

With Prysmian expected to make decisions shortly after receiving shareholder approval (and remember, they announced the Prysmian / Encore rep decision 30 days after the deal was announced), decisions are being discussed, perhaps made, “behind closed doors.”

So, the question becomes, “what is Meglio’s next move?”