Canada’s Independent Distributor Buying Groups Join Forces in Merger of AD and IED

Canada’s electrical distribution market has endured waves of consolidation over the years giving the large national and international distributor chains a prominent position in the country’s major electrical product markets. The announcement last month of a merger between the two largest distributor buying groups in Canada brought consolidation even to those distributors who have remained steadfastly independent.

Affiliated Distributors (AD), Wayne, Pa., announced on Nov. 14 that it had struck a merger agreement with Independent Electrical Distributors (IED), based in Mississauga, Ontario. AD was already the biggest distributor buying group on the continent, measured in the total sales handled by its members, and the addition of IED to the fold will roughly double the total for Canadian sales of AD members, putting the group in control of 23% of the electrical products distribution market in Canada, by AD’s reckoning.

AD has been active in the Canadian market since 1992, when it merged with another electrical distributor group, Copel. Going into the deal with IED, AD had 16 companies in its Canadian electrical sector with 143 branch locations and sales of about $750 million. The IED merger adds 36 more companies to that group, with operations in nine Canadian provinces and the Yukon and Northwest Territories. Most of them are smaller in size than AD’s average Canadian distributor, as the 36 IED distributors account for 90 branch locations and $800 million in sales. So the total AD electrical footprint in Canada will cover 52 companies with 233 branch locations and $1.5 billion in electrical sales, just over 10% of the total North American sales of electrical AD members, which will rise above $13 billion.

IED, like all North American distributor buying and marketing groups, has seen the waves of consolidation affect its membership over the years since its founding in 1965. IED earlier this year saw its largest member, EECOL, acquired by international electrical distribution giant WESCO Distribution, Pittsburgh. EECOL’s sales will count as part of IED/AD totals through 2013, AD said.

Jim Milne, IED’s current president, will manage the newly combined Canadian group as AD’s president of the Canadian division and report to David Oldfather, president of AD’s Electrical divisions. Milne said in the press release announcing the merger, “We’ve always had a great deal of respect for the AD Canada distributors, and now that we have the opportunity to join into a single entity, the collective strength of this group will allow even further market penetration and growth beyond what would be possible by the two separate groups. As IED, we also bring to the group a long-standing, successful customer rewards program, a well-known differentiator in the contractor community, and a proven way to gain and retain mindshare.”