Sonepar Offers to Buy Hagemeyer for EU2.51 Billion (Update7)
By Jeroen Molenaar and Anne-Sylvaine Chassany
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Oct. 9 (Bloomberg) -- Sonepar SA offered to buy Hagemeyer NV for 2.51 billion euros ($3.5 billion) to become the world's largest distributor of electrical sockets and switches. Hagemeyer rejected the offer as too low and said it will meet its suitor.
The closely held French company bid 4.25 euros a share, 57 percent more than the Sept. 27 close, before takeover speculation began. Hagemeyer rose 14 percent to 4.72 euros in Amsterdam trading as investors bet on a higher offer.
The acquisition would boost Sonepar's sales by two-thirds and push it past market leader Rexel SA, which acknowledged the offer and will ``evaluate its options.'' Hagemeyer, founded in 1900 as a Dutch East Indies trading company, makes cable and fuses used in construction and by industrial customers BASF AG and Siemens AG.
``There's a strong industrial logic to buy Hagemeyer for both Sonepar and Rexel,'' Fortis analyst Olivier Macquet said. ``Rexel may be tempted to counter bid, even though it wasn't the initial plan. Hagemeyer is one of the last few large players to buy.''
Sonepar, based in Paris, made its intentions known to Hagemeyer late yesterday. The Dutch company noted Rexel's statement and called on Sonepar to clarify its intentions after saying the price ``significantly'' undervalues it. BNP Paribas and ABN Amro are advising Sonepar.
Hagemeyer's advance was the steepest since Jan. 14, 2005. By contrast, Rexel slipped 5.3 percent to 13.35 euros in Paris.
Safety Gear
<b>N.M. Rothschild & Sons and Goldman Sachs Group Inc. is advising Rexel as it mulls a possible bid, Capital reported on its Web site, without saying where it got the information. A bidding war may lead Sonepar to raise its offer to 5.60 euros a share, the French magazine said. Rexel spokeswoman Penelope Linage declined to comment.</b>
``Our strategy now is to wait and see,'' Ignacio Pedrosa, a spokesman for Madrid-based Bestinver Asset Management said today by telephone. Bestinver owns more than 5 percent of Hagemeyer.
Hagemeyer would be Sonepar's second major acquisition in the Netherlands. Founded in 1969 by the Coisne and Lambert families, which still own the company, it bought Otra NV in 1982 to double its size. Sonepar's revenue totaled 9.45 billion euros last year.
Hagemeyer employed 17,519 people at the end of 2006. Management has plans to open distribution centers in Madrid and Barcelona to tap demand in Spain's construction market.
Sonepar, which distributes gear in 29 countries and counts 23,000 employees, made 14 acquisitions in the first half, adding more than 500 million euros in revenue. Annual sales have grown above 10 percent over the last 20 years.
Rexel may be lured into a counter bid as a larger business would have more pricing power among customers and suppliers, Fortis's Macquet said today.
Stand-Alone Strategy
Hagemeyer shares fell the most in four years on Aug. 17 after profit rose less than analysts estimated on costs to reorganize its distribution system in the U.K. Chief Executive Officer Rudi de Becker said at the time that the Dutch company is ``absolutely not for sale'' and that shareholders support its stand-alone strategy. The CEO is scheduled to step down next year.
The company disposed of nine businesses following losses of more than 500 million euros since 2003. The failed computer system to manage the distribution of electrical products in Britain pushed the 107-year-old company close to bankruptcy and forced it to raise new capital in 2003.
Stock of Hagemeyer yesterday rose as much as 7.1 percent to equal Sonepar's offer price and Dutch stock market regulator AFM said it's monitoring the situation.
``Sonepar's bid is too low,'' said Fortis's Macquet, who estimates the bid should be at least 5 euros a share. ``It doesn't reflect the recovery potential of Hagemeyer. Rexel would need to raise debt. It would not look good financially for two to three years and that's why Rexel shares are falling. Sonepar is privately owned, they can afford two or three difficult years.''
To contact the reporter on this story: Jeroen Molenaar in Amsterdam