Rexel CEO: Hagemeyer deal will effectively double our size
Industrial Distribution staff -- Industrial Distribution, 3/31/2008 8:09:00 AM
Rexel CEO Jean-Charles Pauze said the French electrical distributor’s $4.77 billion deal to acquire Dutch rival Hagemeyer will double his company’s size, the EuroBusiness Media Web site reported.
“Compared to what we have been doing in the last three years, this will really double the size of the group,” Pauze said. “Europe will represent now 60 percent—or close to 60 percent—from our total [revenues] for the group, while we were around 45 percent before.”
The buyout also expands Rexel’s footprint in countries where it lacked a presence, he added, citing Hagemeyer’s holdings in the Baltic countries, Finland and Norway.
On the financial side, Pauze predicted the acquisition will take Rexel’s 2007 sales to about $22.6 billion, a 30 percent increase. The company ranked second on INDUSTRIAL DISTRIBUTION’s 2007 Top 10 List of Electrical Distributors, with sales of $12.3 billion in 2006.
Synergies from the deal are expected to amount to about 1.5 percent of the acquired revenues by 2011, he noted.
“Since 2004 we have acquired 25 companies and integrated them,” Pauze said. “We also in 2006 acquired Gexpro, the GE supply division, and we are in advance on our plan in posting the synergies of this acquisition. So, with Hagemeyer, actually, we will use all this experience; we will naturally have the synergies related to the whole purchasing side, creating stronger relationships particularly with our strategic suppliers.”
Over the medium term, Rexel plans to dissolve Hagemeyer’s corporate structure to take advantage of back-office synergies.
Part of the buyout involves spinning off Hagemeyer’s North American, Asian-Pacific and some European assets to French peer Sonepar within the next six months, Pauze said.
More bolt-on acquisitions might be ahead in 2008, he added.
“We see a growth up to 2011[of] between 4 percent to 6 percent, also with bolt-on acquisitions up to half of this growth rate,” Pauze said.
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