Insights into the forces shaping our industry.
Who’s Next – Distribution
Our industry has yet to see a slowdown in regards to mergers and acquisitions. But will COVID-19 affect current and future M&As? Companies are adjusting and proceeding using online meeting technology to fill the in-person void. We expect M&A deals will continue and be approached the same way with virtual meetings. We are treating this situation similarly to the last recession.
Between 2007 – 2008, Sonepar, Viking Electric, CED, REXEL, USESI, among a few other distributors didn’t let their acquisition business falter. During the 2008 recession, companies managed to complete acquisition deals; and we trust organizations today will carry on despite the COVID-19 pandemic.
Among power distribution, electrical distribution, wire/cable and lighting; our records show that there were well over 60 M&As in 2019. Legrand, Emerson and Siemens acquired manufacturers across three of the verticals, with Acuity Brands taking over in lighting. Companies strategizing to increase market share, expand markets served, etc.
Here’s a review of M&As over the last few years (primarily focused on 2017 – now).
In 2019, CED acquired several other distributors; expanding their market reach (Nu-Lite Electrical Wholesalers – Elmwood, LA and Sun Valley Electric Supply – Las Vegas, NV). And it was announced December of 2019 that CED purchased a historic St. Louis distributor with six locations, Frost Electric Supply. CED had a busy 2019, much more than the two previous years with a single acquisition in 2018 and none in 2017.
In 2017, distributors tended to acquire one company for the entire year. Though, Winsupply was busy during this time, acquiring a handful of distributors across the US and diversifying their portfolio. Winsupply purchased companies in HVAC, plumbing, industrial (pipes/valves/fittings/tubes), wire/cable (conduit) and lighting. With an active 2017, Winsupply has since slowed down to buying one or two companies from 2018 – February 2020. Other onesie buys in 2017…Revere Electric Supply of Mokena, IL purchased Nelson Electric. Mayer Electric Supply Company entered the Arkansas market with the acquisition of Upchurch Electrical Supply Company. Lawson acquired Calgary-based distributor, The Bolt Supply House. Atlanta-based HESCO expanded its market to Savannah with the purchase of Georgia Electric Supply. Widening its market reach, Gordon Electric Supply purchased Pontiac Electric Supply of Pontiac, IL. Among a few other 2017 purchases, Crescent Electric Supply acquired two companies, Womack Electric Supply in Danville, VA and Ohio-based Mesco Electric Supply.
2018 was not nearly as lively as the previous and succeeding year. Distributors were acquiring companies on to enter and/or increase market share. Cresent Electric Supply Company acquired National Electric Supply, market leaders in the Albuquerque and Santa Fe, New Mexico areas. Connexion bought Van Meter Inc.’s Chicago location, expanding its already Chicagoland-based presence. Mayer Electric Supply, a Birmingham, AL based firm bought and added The Hite Company to its Northeast division. Spring Electric Supply Company expanded its Indiana coverage with the acquisitions of Valley Electric’s operations in Vincennes and Terre Haute, IN; and Tri State Lighting & Supply, serving Evansville market. There was not one distributor that purchased multiple distributors. The years 2017 and 2019 saw more buys from a single company than 2018.
So far in 2020…
There has been some M&A movement the first quarter of 2020. Power distribution, electrical distribution and lighting has already seen some noteworthy purchases. Earlier this month, Cooper Lighting became a business unit of Signify and Legrand’s unexpected acquisition of Chicago lighting manufacturer Focal Point. Ecosense just expanded its LED lines with the purchase of Soraa, a California-based LED designer and manufacturer.
ABB, Eaton, Danfoss A/S and IES Holdings have started off their years strong with at least one acquisition. ABB solidified its purchase of Cyclone Controls in early March. Eaton purchased Power Distribution Inc. Expanding its data center power distribution and monitoring solution; and in turn, Eaton sold its Hydraulics Business to Danish industrial company, Danfoss A/S.
Wire and cable’s saw a change in PE firm ownership with Odyssey Investment Partners’ acquisition of NSi from Blue Sea Capital.
The Anixter war heated up in January until Wesco’s big and final bid was accepted. Winsupply already has two acquisitions under its belt with the purchases of Morgan Brothers and Rosen Supply to expand in the plumbing and heating market.
If the past few years and the recession are any indication, electrical distributors will continue to acquire in the next three quarters. M&A deals may slow down in quarter two as we all work out the kinks of our current situation with the Novel Coronavirus; but we expect business to continue as usual.