WESCO International, Inc. (WCC) recently announced its deal to acquire Hazmasters, Inc. through its wholly owned Canadian subsidiary, for an undisclosed amount. The deal is expected to close by the end of March.
Headquartered in Ontario, Hazmasters distributes safety products in the industrial, construction, commercial, institution and government markets. The company generates annual sales of approximately $80 million from 14 branches across Canada.
The Hazmasters acquisition will enhance WESCO’s safety business and customer base, in turn, strengthening its Canadian footprint. WESCO has been operating in the Canadian market for more than nine decades with employee strength of about 1,100. In 2013, the company generated approximately 25% of the revenues from Canada with annual sales of $1.88 billion ($1.08 million in 2012 or up 73.6% year over year).
The acquisition is also expected to be accretive to WESCO’s earnings. It will likely add 5 cents per share to the company’s profit in the first year of operation.
WESCO is quite active on the merger and acquisition front. Last year, WESCO acquired RS Electronics and LaPrairie, which expanded the company’s industrial OEM (original equipment manufacturer) customer base and enhanced its electronic-based product offerings. In Jul 2013, WESCO acquired British Columbia-based Trydor Industries (Canada) Ltd. — a distributor of high-voltage electrical, industrial and utility products — to strengthen its industrial and utility market position in Canada.
The company’s acquisition pipeline remains quite robust with opportunities to further expand and strengthen its portfolio.
WESCO is one of the largest suppliers and distributors of electrical construction products in the United States. The company’s fourth-quarter adjusted earnings and revenues were up a respective 18.9% and 14.3% year over year. The improvement was aided by acquisitions and increase in organic sales, partially offset by unfavorable currency movements.
Currently, WESCO has a Zacks Rank #4 (Sell). Other better-rankled stocks that are performing well at current levels include Avnet Inc. (AVT), Carnival Corp (CCL) and Six Flags Entertainment Corporation (SIX). All these stocks carry a Zacks Rank #2 (Buy).
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