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WESCO announces IPO , agrees to buy Avon Electric and Brown Wholesale

Feb. 1, 2003
WESCO Distribution, Inc., went on a bit of a holiday shopping spree toward the end of last year, and topped it off on Christmas Eve by filing a registration

WESCO Distribution, Inc., went on a bit of a holiday shopping spree toward the end of last year, and topped it off on Christmas Eve by filing a registration statement with the Securities and Exchange Commission to launch an initial public offering of common stock.

The Pittsburgh-based national chain announced its intent to buy two Top-50 independent distributors that together will give WESCO a $165-million boost in annual sales and major advances on the East Coast, in the Southwest and along the Pacific. WESCO signed agreements to acquire Brown Wholesale Electric Co., Inc., Los Angeles, Calif., and certain assets of Avon Electrical Supplies, Inc., of Hauppauge, N.Y.

The agreement with Avon Electrical Supplies involves the acquisition by WESCO of some assets and the assumption of some liabilities for an undisclosed amount on money. Avon Electrical Supplies is the 44th largest electrical distributor in the country, with three locations and 110 employees going into the deal and 1996 sales of approximately $83 million in annual sales.

The acquisition would strengthen WESCO's hand in the massive New York City metropolitan area. Avon Electrical Supplies' success in the international market was another draw, said Mehta. WESCO had been looking to establish an export market in New York, but will not have to do that if the Avon Electrical Supplies acquisition closes.Kenny and Lenny Moskowitz, co-owners of Avon Electrical Supplies, will retain certain assets of the company and will head the new division, which will most likely operate under the Avon name.

In the agreement with Brown Wholesale Electric, WESCO would acquire nine branch locations in California, Hawaii and Arizona, for an undisclosed sum. Brown Wholesale Electric, which operates under the name Excel Electric Supply in California and Hawaii, is 49th on EW's list with estimated 1996 sales of $80 million and 225 employees.

WESCO was attracted to Brown Wholesale Electric primarily because of its strength in the Phoenix market, which by some measures is one of the nation's fastest-growing markets for electrical products. "Combining our operations in Arizona will make WESCO the leading distributor of electrical and industrial products in the second fastest-growing area of the country," said Patrick Swed, vice president of WESCO's Industrial/Construction Group. "Phoenix alone has a potential of about $450 million a year in our type of business, and we are looking forward to developing many new customer relationships as a result of our greatly enhanced market position."

Brown Wholesale Electric's operations in Phoenix and Tucson, Ariz., will continue to operate under the Brown Wholesale name. WESCO's Tucson branch will be consolidated into Brown Wholesale, according to Swed.

Ray Sullivan, who opened Brown Wholesale's Phoenix branch in 1954, will continue to lead the Arizona operations as district manager.

Ross Brown, Brown Wholesale's president, would continue to be involved in the business as a consultant to WESCO.

The company's parent, CDW Holdings, meanwhile, filed papers with the SEC expressing its intent to offer up to $300 million worth of common stock in an IPO to take place "as soon as practicable." CDW's largest stockholder is a private investment fund managed by Clayton Dubilier & Rice, Inc. (CD&R), New York, N.Y., the firm that orchestrated the purchase of WESCO from Westinghouse Electric Corp. (now CBS Corp.) in 1994. From the beginning, WESCO and CD&R have been clear about their intent to eventually take the distributorship public.

About the Author

Doug Chandler | Senior Staff Writer

Doug has been reporting and writing on the electrical industry for Electrical Wholesaling and Electrical Marketing since 1992 and still finds the industry’s evolution and the characters who inhabit its companies endlessly fascinating. That was true even before e-commerce, LED lighting and distributed generation began to disrupt so many of the electrical industry’s traditional practices.

Doug earned a BA in English Literature from the University of Kansas after spending a few years in KU’s William Allen White School of Journalism, then deciding he absolutely did not want to be a journalist. In the company of his wife, two kids, two dogs and two cats, he spends a lot of time in the garden and the kitchen – growing food, cooking, brewing beer – and helping to run the family coffee shop.

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