Earlier this week, Rexel USA announced its second-largest acquisition in history when it agreed to acquire Revere Electric Supply.
While attending the NAED National Meeting, Rexel USA CEO Roger Little and Jordan Lomheim, Rexel USA’s Senior Vice-President and Chief Strategy Officer, sat down with tED magazine to discuss the acquisition and expectations for the future.
“If you looked at the map and looked at our density around the US, we had a lot of white space in that Midwest corridor,” Roger Little explained. “When I started 2 1/2 years ago, it was like OK, I have to start finding something to fill that white space. We looked at an organic move and decided that wasn’t probably the most advantageous to us.”
Jordan Lomheim describes the deal as an opportunity for growth. Revere will continue to operate under the same name while Rexel maintains the company’s ongoing culture, leadership team, and operating model. “The allows us to take a high quality, legacy business with a very strong history, and attach that to our Midwest business,” Lomheim said. “From a people standpoint, we saw a lot of things that jumped out in terms of values being aligned, capabilities, talent, a similar mindset around the ‘go to market’ approach, and we spent a lot of time with (Revere Electric Supply President) John Cady outlining what that vision looked like. As we went through that process, our confidence went up significantly.
“One of the things that’s missed in our industry is we’re not acquiring intellectual property and manufacturing assets. At the end of the day, when we go out and we acquire a distributor, we’re bringing people in. We are ultimately acquiring talent. There’s an obsession over that topic.”
Little added that the acquisition will benefit Revere Electric Supply because Rexel already has the digital and technical capabilities needed to grow. “The discussions were around digital platforms and AI tools,” Little explained. “You can imagine how daunting that is. They are a large independent, but can imagine how costly those tools are, and the implementation has a pretty long curve to it. They can leverage what our teams on the IT side have already and get it in place quickly. We are both on the same ERP, so that was a natural fit and we can accelerate some things there. John Cady certainly has a vision where he wants to take the business, but the capital required, the investment in time and money to make that happen, that’s a big ask of a family-run business.”
Lomheim pointed out the agreement attaches to the previous acquisition Rexel and Talley made to acquire Connectronics, a company that is very familiar with Revere. “A bit of a back story to that,” Lomheim said. “Last year we executed the acquisition of Connectronics (through Talley) that was connected to, and a part of, the Revere umbrella. Not sure that jumped out to the world. But when we acquired that business, we were able to deeply understand the ERP, the technology capabilities, a lot of the back-office aspects of Revere. That helped us of understand hey what is the value creation potentially here, outside of the commercial side.”
Not lost in this acquisition is the fact that Rexel and Revere are Rockwell Automation distributors. The fit will expand opportunities in that relationship, and Little said Rockwell accepts the new business model.
“We started looking at distributors obviously with the Rockwell connection,” Little said. “After we got to know the Revere family, we knew it was a very good fit. The Rockwell connection, and the relationships we have with their product portfolios was really good.”
Little added, “Automation is very much in our DNA, it’s been a big part of Rexel USA for a long time. It’s a big part of Rexel North America quite honestly. We have strong footprint on both sides of the border with automation. Revere is one of the founding Rockwell APR holders and had two APRs with Rockwell. It’s a good fit there obviously. We can take some of the scalability of things we bolt on to those APRs in the automation business and introduce them to Revere and accelerate their business as well. We pick up a couple APRs and we can help them with the advanced services around the automation business not just selling product but selling advanced services that we intend on doing in those APRs.”
As for future growth from this transaction, both Little and Lomheim said they are nowhere near done. That could include growth both organically and through acquisitions. “The aspiration is to accelerate,” Lomheim said. “At the end of the day, we want to be the acquirer of choice in the industry. And it’s not just acquirer of choice; it’s also this other element around shared alignment and vision with either the management team and the family of plants after the deal closes. We get to a spot where we can be really creative about how we think about integration, how we think about investment and capital deployment into the business. I anticipate the pace of M&A acquisition, let’s call it over the next 24 to 36 months, potentially accelerating for Rexel USA based on where our current pipeline is at and the opportunities that are out there. I don’t see it slowing down. I see us speeding up.”
“It gives us a really strong footprint in the Midwest, it doubles our footprint immediately, which we were really looking to do, and then it gives us an anchor that we can spread out from. Our goal is to not stop,” Little added. “I would hope that we can find some acquisitions to bolt on to this. And we’re also not opposed to having Revere acquire some businesses that would supplement what they’re doing. But for sure we want to grow organic as fast as we can. We know how to do that. We quietly opened about four or five branches a year organically. It takes capital, but for our size organization that’s not a problem. John Cady and the team at Revere are acutely aware that they’ll be opening some branches. Maybe not in the first six months, but probably not long after that.”
Tagged with acquisition, Revere Electric Supply, Rexel