Datacom distributor WESCO International acquiring Communications Supply Corp.
Electrical products and systems distributor WESCO International (www.wesco.
Electrical products and systems distributor WESCO International (www.wesco.com) has announced it has entered an agreement to acquire Communications Supply Corp. (CSC; www.gocsc.com) from CSC’s parent, private-equity firm company, Harvest Partners LLC. A Form 8-K that Wesco filed on October 3 stated the purchase price is approximately $525 million.
Both companies say the transaction, which they expected to close early this month, would bring additional value rather than inconvenient change to its customers. “The combination of these two leading distributors will create a dynamic enterprise,” according to Steven Riordan, CSC’s president and chief executive officer, who will continue in that role and also serve as a member of WESCO’s senior management team.
“CSC has been recognized for delivering measurable value and outstanding support to its customers and suppliers,” Riordan continues. “We believe that our customers will gain even greater access to products and product expertise, providing them with one-stop shopping. We are looking forward to our role in providing leadership to the existing WESCO datacom business within the United States.
“CSC will continue to operate under its current management team and structure within the WESCO organization,” Riordan adds. “WESCO’s national and international scope provides our sales organization access to a world-class distribution network and numerous Fortune 500 strategic customer relationships.”
“Communications Supply is a very well-run company with an outstanding track record of above-market growth and profitability,” says Roy Haley, WESCO’s chairman and CEO. “The addition of CSC to WESCO’s existing business and infrastructure is consistent with our growth strategy, and this acquisition positions WESCO as a leading provider of data communications products in North America. Our intent is to rapidly build on this position by offering a broader array of products to WESCO’s national accounts, contractor and other end-market customers. We also believe that the fragmented nature of the low-voltage and data-communications supply industry will likely lead to additional acquisition opportunities.”
Earlier this year, CSC made two acquisitions in that fragmented space; the company acquired Calvert Wire & Cable in March, and Liberty Wire & Cable in May. After the Liberty deal, CSC had a total of 32 stocking branches in the United States and a sales force of more than 300. WESCO, according to the company’s Web site, has 370 full-service branches, eight distribution centers, and more than 6,000 employees.
Last year, CSC’s sales were $431 million, and this year’s sales through August 31 were $394 million. Full-year revenues are estimated to be $600 million. WESCO’s annual sales for 2005 were approximately $4.4 billion, and the company says it expects combined CSC and WESCO revenues for this calendar year to approach $6 billion.
Looking ahead to the integration of the two organizations, WESCO’s senior vice president and chief financial and administrative officer, Stephen Van Oss, said, “We will look for ways to apply WESCO’s national distribution capabilities, strategic account relationships, and lean process improvement techniques to CSC’s existing business. We will also be identifying and adopting effective business practices successfully utilized by CSC. These activities should provide significant sales opportunities, and operational and administrative synergies. We are also very pleased that the proven and experienced management team will remain intact and assume expanded responsibilities for enhancing our sales and service capabilities.”