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WESCO to Acquire LaPrairie

Zacks Equity Research

WESCO International, Inc. (WCC) announced its agreement to acquire LaPrairie, Inc. for an undisclosed amount. The deal is expected to be closed in January.

Headquartered in Canada, LaPrairie distributes high-voltage electrical products and services for transmission, distribution and substation needs for utilities and utility contractors across Ontario, Quebec and Atlantic Canada. The company generates annual sales of approximately $30 million from a single location in Newmarket, Ontario.

The LaPrairie acquisition will bolster WESCO’s presence in Canada through the expanded utility business and customer base. WESCO has been operating in the Canadian market since 1922 with employee strength of about 1,100. In 2012, the company generated approximately 17% of revenues in Canada with annual sales of $1.08 billion ($900.6 million in 2011 or up 20% year over year).

The acquisition is also expected to be accretive to WESCO’s earnings. It will likely add 3 cents per share to the company’s profit in the first year of operation.

WESCO is quite active on the M&A front. Last year, WESCO acquired RS Electronics, which expanded the company’s industrial OEM (original equipment manufacturer) customer base and enhanced its electronic-based product offerings. In July, WESCO acquired British Columbia-based Trydor Industries (Canada) Ltd., a distributor of high-voltage electrical, industrial, 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 third-quarter earnings and revenues were up a respective 17.8% and 16.6% year over year. The improvement was aided by acquisitions, partially offset by a reduction in organic sales and unfavorable currency movements.

Currently, WESCO has a Zacks Rank #3 (Hold). Other better-ranked stocks that are performing well at current levels include Montage Technology Group Limited (MONT), Inphi Corp (IPHI) and Microchip Techcnology (MCHP). All these stocks carry a Zacks Rank #2 (Buy).

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