Rexel Bolsters U.S. Industrial Footprint with Deal to Acquire Brohl & Appell

Rexel has acquired Brohl & Appell, Sandusky, Ohio, an electrical distributor specializing in industrial automation and MRO services. With about 60 employees, Brohl & Appell, founded in 1889, has built a strong partnership with Rockwell Automation. According to a Rexel press release, Brohl & Appell delivered sales of approximately $26 million in 2015 through seven branches and posted profitability above the Rexel Group average. Neil and Mary Ebert will reportedly continue to manage the company.

This acquisition strengthens Rexel’s position in the U.S. in industrial automation market, which represented around 15% of the Paris-based group’s total sales in the U.S. in 2015. Rexel is known best in the North American electrical market for its commercial business, but it has a heavy industrial automation focus in select markets, especially where it holds the Rockwell Area of Primary Responsibility (APR).

The acquisition of Brohl & Appell also complements Rexel’s industrial MRO offer more generally, while providing a springboard to profitable growth opportunities with complementary product and category expansion, in addition to new energy efficiency propositions and customer productivity tools and technology, Rexel said.

The transaction, subject to customary conditions, should close later this month.

Meanwhile, its presence in the U.S. industrial market is causing some near-term heartburn for Rexel, which made headlines this week when it released its financial results for 2015. Rexel CEO Rudy Provoost said volatile economic conditions in North America and China and persistently low commodity prices may cause its sales to grow just 1% at best in the year ahead with a downside range of a 3% decline. The statement led to the biggest drop in seven years in the company’s stock price, down 14% early in the day of the announcement according to Bloomberg Business.

“Taking into account low copper and oil prices, the slowdown of the Chinese economy and the uncertainty around the North American industrial market, the start of 2016 leads us to be cautious in our guidance for the year, even if Europe could experience a slight gradual recovery,” Provoost said in a Capital Markets Day presentation to investors on Thursday in Paris.

Rexel reported sales of €13.5 billion in 2015, down 2.1% on a constant same-day basis. Earnings before interest, taxes, depreciation and amortization (EBITDA) were €593.5 million, or 4.4% of sales, down 14.7% from 2014.

The investor presentation focused on Rexel’s roadmap and financial goals out to 2020, including growth expectations of 1% to 2% annually on organic same-day sales and EBITDA growth of at least twice the rate of organic sales growth. Rexel said it has a budget of around €1.5 billion for acquisitions over the 2016-2020 timeframe, which it said could generate cumulative add-on sales of €2 billion.

Brohl & Appell’s history goes back generations to its 19th century beginnings as an installer of gas chandeliers. It has held the Allen-Bradley franchise in its territory since 1934. Its acquisition in 2012 of New Haven Supply added locations in New Haven, Norwalk, Mansfield, Tiffin and Upper Sandusky. Brohl & Appell placed at No. 190 on the Electrical Wholesaling Top 200 list for 2015.