Sonepar's expansion into Europe
By the end of the 1970s, Sonepar had consolidated its position as a rising star in France and started to look abroad for the right opportunity to expand abroad. That opportunity came in 1981, when rival company Otra ran into difficulties. Otra comprised two entities: the Dutch electrical distribution company Technische Unie, and the German firm Otto Kuhmann. At the time, Otra was owned by a Dutch parent company called Ogem, which needed to quickly divest Otra.
Sonepar’s founder and then CEO Henri Coisne heard about the planned divestment and to his surprise, there were few other bidders looking to acquire Otra. “I was expecting a queue of candidates lined up to buy the business,” he explained years later in the book Sonepar, Or the Quintessence of Things (1998). “But, far from it – no one, or practically no one, was interested in Otra.”
Otra, like Sonepar, was a family-owned business, though its history stretched back to 1880. Otra had a similar level of revenues, but employed many more people than Sonepar at the time. It was losing money, but Sonepar’s CEO was convinced of the strategic value of the deal.
“Discussions dragged on,” Henri Coisne recalled. “In late 1981 or early 1982 I made an offer, but it was not accepted. The decision to acquire Otra was a vary daring one for us because our turnover was the same as theirs. It was much more than a step for Sonepar – it was a leap forward… But a visit to The Netherlands convinced me that the asking price was a third of the real value. It was a fabulous deal.”
Suddenly, in August of 1982, Henri Coisne got a call while he was on holiday in Cannes. Otra had accepted his offer and wanted to finalize the deal – fast. However, Henri Coisne knew the deal would only work if it had the backing of the Otra employees, so he signed an agreement with all the managers of Otra, stipulating that under no circumstances would Sonepar interfere with the running of the company, unless it ran into trouble.
Henri Coisne then appeared before an Otra employee committee and explained that Sonepar was totally dedicated to helping the company grow. For a while, the deal teetered on the brink, with Sonepar ready to back out unless they were sure they had the support of the Otra employees. In the end, the Otra employee committee was convinced and gave the purchase its wholehearted support.
The final agreement was signed in the Netherlands, in the Bilderberg Hotel, in October 1982, in an atmosphere of mutual respect. The manager of Otra’s German activities, Hermann Hakes, later summed it up nicely, saying: “The fact that Sonepar was a family business was a point in their favor. We preferred that to some anonymous conglomerate. This family character was no guarantee for our future, but at least it ensured that we would be dealing with human beings.”
In fact, within a short period of time, the deal already started to pay off. Otra returned to profitability and, by 1991, had become one of the best performing Dutch companies in all sectors. More importantly, the deal was a first step into international territory for Sonepar and laid the foundations for the bold strategy of international acquisitions that would catapult the Group to the position of global leader.
Today, Technische Unie heads up Sonepar’s Dutch business, which generates more than €1.5bn of revenue for the Group through 40 local branches.