Rockwell Refusal to Appoint Elliott Electric as Distributor Blocks Bid to Buy Warren

Elliott Electric was notified last week that Rockwell Automation will not approve its bid to buy Warren Electric.

The news hit on Nov.12, after Bill Elliott, president of the Nacogdoches, Texas-based Elliott Electric Supply, had hammered out an asset-purchase agreement to acquire Warren Electric Group, Houston. The agreement was contingent on his company being appointed a distributor for Rockwell Automation.

Elliott said Rockwell Automation told him in the early stages of the negotiations that while they could not at that point guarantee that Elliott Electric Supply would get the Allen-Bradley line if he made the acquisition, they “were favorably impressed” with the company.

“I told them we wouldn't spend our time on this if they were not going to approve it, and that we wouldn't buy Warren without the Allen-Bradley line. They came to Nacogdoches and looked at our place and liked our organization. They were happy with our financials. We seemed to have the green light.”

At that point, Elliott began working on the asset-purchase agreement with Warren and the unsecured creditors committee. He said this agreement would have provided creditors 65 cents to 70 cents to the dollar on what Warren Electric owed them.

But last week Rockwell Automation told Elliott that they would not appoint Elliott Electric Supply as a distributor because they had not done business with the company in the past.

“It would have been a nice marriage, and done a good job for both Rockwell and Warren,” said Elliott. “They needed capital and a good IT system. We feel that's our strength.”

Elliott said Rockwell would accept The Reynolds Co., Dallas, as a distributor, because it already had the Allen-Bradley line. Reynolds purchased eight of the Warren Electric locations in north and central Texas in July and has the APR (area of primary responsibility) for these locations.

The Reynolds Co. could not be reached for comment at press time. In keeping with its long-standing policy of not commenting about its distributor appointments, Rockwell Automation declined to comment on the Elliott Electric bid.

Elliott Electric had more than $135 million in 2001 sales and 44 locations, according to Electrical Wholesaling's 2002 250 Biggest listing. Warren Electric Group had 2001 sales of $271 million and was ranked 19th on that listing.

Warren had filed for bankruptcy protection last month after its lead lender chose not to continue its support of the company's efforts to reorganize the company.