Anixter International has recently made three acquisitions – two overseas and one in the Midwest. Here’s what the distributor’s CFO says about the company’s growth plans.
Expanding a company through acquisitions is about more than just growing in size, says Dennis Letham, CFO of Anixter International, a distributor of communication products, electrical and electronic wire &cable, and fasteners. It’s about growing in the right place at the right time in the right way. And, the Glenview, IL-based distributor has been finding those opportunities in many places in recent months.
Since the beginning of August, Anixter has made three acquisition announcements in the U.S., Mexico and Europe. Though Letham says the timing of the announcements was completely coincidental, it underscores the company’s commitment to logical growth: Go where your customers are and build on your core strengths.
Doing Business Overseas
If you’re making the same model of product in the Far East, Europe and the U.S., you can, through a supplier relationship with Anixter, obtain the fastener component you need. That’s what we mean by being where the customers are,”Letham says.
Succeeding in the international marketplace requires balancing the goals of the community with those of your company. Because the two may be divergent, it’s important to not lose sight of your corporate standards and principles, while accommodating local business practices.
“Today we’re in 50 countries around the world. If we look at those, there are some that are very North American in how business is conducted in terms of what the standards of business are, what the ethics of business are,”Letham says. “And there are some countries that are on a very different point on that continuum.”
Expansion into any foreign country requires diligence on the front end to thoroughly understand how the local marketplace works and what the community expects from your business. For Anixter, that means that in the smallest of countries they’re in, they are there primarily to support those multinational clients rather than participate in the local economies. “The multinationals have the same expectations about quality, service and ethics no matter where they do business,”Letham says.
In July, CEO Robert Eck announced that Anixter would focus on growing the company’s security and OEM supply businesses. While expanding its OEM supply business goes back to supporting the multinationals, the focus on security -in particular cabling for video surveillance equipment -was a logical extension of a historic strength for Anixter: corporate data cabling. “We always look for logical extensions within our end markets,”Letham says.
Video surveillance equipment is a growing market. “Unfortunately societies everywhere have to use products like video surveillance to create safer environments for their citizens, employees and students. That’s driving demand.”
Additionally, the shift from analog interfaces to digital technology is providing steady growth in the segment. Just because the technology is available doesn’t mean that everyone is going to rush out and upgrade, Letham said. Instead, they wait until they have to upgrade, whether they are moving into a new building or just need to expand their current capabilities. He estimates 75 percent to 80 percent of organizations that use video surveillance are still using analog systems.
Of Anixter’s three recent acquisitions, two were international distributors of OEM fasteners. Letham says that expansion of the international fastener business has been a primary focus for Anixter’s acquisition program since 2002. Anixter expects $1.4 billion in annualized fastener sales with the addition of these businesses.
The third was a single-location acquisition, World Class Wire &Cable Inc., Milwaukee, WI, a distributor of electrical wire and cable.
The coincidental timing of the acquisitions should not be taken as a sign that the company is accelerating its acquisition plans, Letham says. Instead, it illustrates dynamics that come into play when buying family-owned businesses. “One day the family thinks they’re making the right decision; the next day they’re questioning the choice,” Letham says. “So we work with them over time to build a relationship of trust between the buyer and seller.”
Anixter reported sales of $5.85 billion in 2007.
Anixter Follows Customers Overseas
Expanding a company through acquisitions is about more than just growing in size, says Dennis Letham, CFO of Anixter International, a distributor of communication products, electrical and electronic wire &cable, and fasteners. It's about growing in the right place at the right time in the right way. And, the Glenview, IL-based distributor has been finding those opportunities in many places in recent months.
Since the beginning of August, Anixter has made three acquisition announcements in the U.S., Mexico and Europe. Though Letham says the timing of the announcements was completely ...
Sign Up for the MDM Update Newsletter
The MDM update newsletter is your best source for news and trends in the wholesale distribution industry.