M&A Blockbuster: Anixter Buys HD Supply Power Solutions

HD Supply Holding, Inc., Atlanta, owner of HD Supply, says it has inked a definitive agreement to sell its HD Supply Power Solutions business unit to Anixter International for $825 million in cash. The deal is the largest ever acquisition by Anixter, and suggests a new direction for the company.

HD Supply Power Solutions is a large utility-oriented multi-line distributor built by HD Supply on a platform of the former Hughes Supply and other acquisitions, and is considered one of the leading utility distributors in the United States. Power Solutions distributes over 200,000 utility, electrical and industrial MRO products to approximately 13,000 customers including investor-owned utilities, public power utilities, electrical contractors and industrial businesses. Operating from a broad geographic footprint of approximately 130 branches in 30 U.S. states and four Canadian provinces, Power Solutions reported fiscal 2014 revenue of $1.9 billion.

That’s why it may seem puzzling that Anixter, an international wire and cable specialist distributor whose involvement in the highly specialized utility market going into this deal has been a small slice of a market mix dominated by industrial, security and communications markets, would be interested in acquiring a utility specialist. One utility rep said he thought  Graybar would have been a more likely suitor for HD Supply so that it could build on its existing utility footprint.

The move may suggest a much broader focus for Anixter, which last year conducted a fairly public search for a buyer and found no takers at its asking price. Anixter president and CEO Bob Eck framed the deal as a move to sharpen Anixter’s focus, while also making Anixter more of a full-line electrical distributor to its customers.

“Power Solutions is a compelling strategic acquisition for Anixter,” Eck said. “Consistent with our message that we are sharpening our focus, this transaction will significantly enhance our competitive position in the electrical wire and cable business and further strengthen our customer and supplier value proposition. In addition to transforming our existing utility business into a leading North American distributor to the utility sector, this acquisition will enable us to provide a full-line electrical solution to our existing customers and will provide us with broader access to the mid-size electrical construction market.”

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