Monday, December 08, 2003

Sonepar's USA heading toward oligopoly Oligopolies are sprouting up all over the place, even in unglamorous industries traditionally run by the moms-and-pops. That's the case in the electric supply business, where a wave of consolidation is gaining steam, in spite of revenue declines overall. Electrical supply distributors sell everything from light bulbs to electric generators, usually to contractors and other business. It's mostly a function of having the right inventory on stock at the right time. As we've seen before, one of the motives for the consolidation of this industry is a similar consolidation in the electrical part manufacturing sector. Oligopolies breed oligopsonies, as the companies that can bargain with the big firms get the best prices and service. That's a big plus in a down market.  Leading Electrical Supply Companies Company Sales ($millions) Graybar Electric 3,974 WESCO Distribution 3,325 Anixter Inc. 2,520 GE Supply Company 2,473 Consolidated Electric Distributors NA Rexel Inc. 2,100 Sonepar USA 1,400 W.W. Grainger Inc. 882 Hagemeyer North America NA Hughes Supply/Electrical Division 623 Source: Electric Wholesaling One company that is rolling up troubled chains across the company is French company Sonepar, through its Sonepar USA subsidiary. That company has ridden the wave of acquisitions. It started at zero in 1998, and in that year managed to purchase a single New England electric supplier. Since that time, it has built an empire in the Northeast and Mid-Atlantic, and Florida, and has bought into the Midwest, the Pacific Northwest, and the Caribbean. It has replaced most of the management at the local operations, mostly with former GE employees. The current company has income of over $1.4 billion. This is a case of how a well-funded, well-managed company can go from nowhere to #7 in a rapidly growing industry. And it is unlikely they will stop now. Although there are hundreds of electrical supply companies in the industry, only seven of them now have incomes in excess of a billion dollars. And the #1 company, Graybar Electric, is only twice as large as Sonepar USA. Funded with suddenly valuable euros, it's hard not to imagine Sonepar USA soon becoming number #1 or #2. Sonepar USA Acquistion History Company Locations Year acquired Eagle Electric Mass. 1998 Cooper Electric N.Y., N.J., Pa. 1999 MarLe Conn. 1999 World Electric Fla. 1999 Branch Electric of New England Mass., Conn., N.H. 1999 Lee Electric Md. 1999 West Philadelphia Electric Pa. 1999 All-Phase of New England Mass., R.I. 1999 Viking Electric Supply Minn., Wisc. 2000 Capital Lighting Supply D.C., Md., Va. 2000 Dixie Electric Va. 2000 Brook Electrical Ill. 2000 Davis Electric Supply Fla. 2000 Daniels Electric Va. 2001 Electric Maintenance Ct. 2001 Richard Electric Fla. 2001 Del Electric Md. 2001 Elite Electric Va. 2001 Lakeshore Lighting Wisc. 2002 Eoff Electric Wash., Ore. 2002 Fromm Electric N.Y. 2002 Warren Caribe Fla., Puerto Rico, Trinidad, Dominican Republic 2003 Levitan-Robbins N.Y. 2003 7:46:21 PM

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