Rexel to acquire GE Supply
July 17, 2006 -- The Rexel Group and General Electric's Consumer & Industrial unit have signed an agreement for Rexel to acquire GE Supply, GE's electrical distribution business, for a total consideration of $725 million.
The Rexel Group (Rexel), a global distributor of electrical supplies, and GE Consumer & Industrial, a unit of General Electric, recently announced the signing of an agreement for Rexel to acquire GE Supply, GE's electrical distribution business, for a total consideration of $725 million.
According to a press release, upon closing of the transaction, GE Supply will operate as a standalone organization and will report to the newly created Rexel U.S. Holding group, currently led by Dick Waterman, Rexel Inc.'s executive vice president and CEO. GE Supply's senior vice president and CEO Jeff Schaper, along with his leadership team, will continue to operate the business.
The transaction is expected to close by early August 2006, subject to consent of Rexel's senior leaders.
Rexel says the move furthers its "leadership in the consolidation of the electrical distribution industry." The company reports that in 2005, it posted $2.5 billion in sales in the $64 billion U.S. market for electrical products.
"By welcoming this highly valuable company within the group, Rexel will double its presence in the U.S. with nearly $5 billion in sales, and reinforce its leadership in the world's largest and fast-growing electrical distribution market," comments Jean-Charles Pauze, chairman and CEO of Rexel. "The acquisition of GE Supply not only increases our presence in the U.S., but demonstrates Rexel's ability to drive consolidation of the industry. This value-enhancing investment is a logical step forward and validates the attractiveness of our business model."
According to the release, with $2.2 billion in pro forma 2005 annual revenues for the transferred business to Rexel, GE Supply is the main distributor of electrical products produced by GE, as well as more than 200 other manufacturers. Headquartered in Shelton, CT, the business employs about 2,500 people globally in more than 150 locations. GE Supply's core electrical distribution activities operate mainly in the U.S.
"The GE Supply team has done a great job of growing the business," remarks James P. Campbell, president and CEO of GE Consumer & Industrial. "Rexel is committed to fostering GE Supply's continued growth by providing support that will help the business expand its presence, products, and services. It's a great fit. The terms of this sale also ensure that GE Supply will remain a strategic distribution channel for GE products. This is a big win for us and for the customers that count on GE Supply to take of all of their GE product needs."
After the acquisition of GE Supply, Rexel says it will operate in the U.S. through a "dual-banner strategy," serving an expanded customer base "with a much larger product offering and reinforced network density." Futher, Rexel says it expects to benefit from GE Supply's large project management experience and national footprint to attract key accounts with a differentiated service offering. Rexel says it will also gain expertise in GE Supply's outsourced offering through the GE Supply Logistics and GE Production Services divisions.
"Together with Eurazeo and Merril Lynch Global Private Equity, we strongly support Rexel and its management team as they continue to build significant value through their acquisition strategy in the attractive and highly fragmented global electrical distribution market," concludes Roberto Quarta, a Rexel board member, as well as a representative of the company's shareholders and a partner of Clayton, Dubilier & Rice, Inc.