Anixter Buys Tri-Ed

By: John Honovich, Published on Aug 11, 2014

Anixter Security has been struggling in 2014, with revenue actually declining in the most recent quarter. In particular, Anixter has emphasized that they are doing poorly in the low end of the market.

And who better at the low end than Tri-Ed? (besides ADI)

The big news is that Anixter is buying Tri-Ed [link no longer available].

In this note, we breakdown Tri-Ed's financial details, examine the strategic fit and the financial impact of the deal.

******* ******** *** **** struggling ** ****, *********** ******** *********** *** **** ****** quarter. ** **********, ******* has ********** **** **** are ***** ****** ** the *** *** ** the ******.

*** *** ****** ** the *** *** **** Tri-Ed? (******* ***)

*** *** **** ** that ******* ** ****** Tri-Ed [**** ** ****** available].

** **** ****, ** breakdown ***-**'* ********* *******, examine *** ********* *** and *** ********* ****** of *** ****.

[***************]

Price / ****

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*** *********** ***** ******* is ******* ********** **% in ****.

*******

******* **** **** ***** was * *********** '*******' to *** ***-** **** **** won.

Tri-Ed's ******* *********

*******'* *********** ******* **** ******* ** Tri-Ed's *******:

  • *****: **% / $*** million ** ***-**'* ******* is **** *****
  • *** ***** **% ** Tri-Ed's ******* ** **** everything **** - ******, intrusion, ****, ***. [*** segmented]
  • ** ********: **% / $445 ******* ** ***-** revenue ** **** *** US, ******* **** ******
  • *********** *****: **% / $228 ******* ** ***-**'* overall ******* ** **** the *********** ******, *** rest **** **********
  • ****** ********: **% ** sales **** **** **** branches
  • *** *** ******* ********: 65% ** ***** *** to ******* **** **** 22% ** *********** *** 13% ** ******** ********

*** ****'* *** ***** from *** ****:

Previously ******** ** ****

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Recent *********

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Consolidation ******** ************ ** *** **

*** **** ****** **** certainly ** ** *** US, *** **** ****** of **** *******.

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*************

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******

****** ******** ******* ** reach *** ***** *** of *** ******, **** now ***** ******* * retail / ***** ******** throughout *** **, ***** could ** ** ***** even ** *** ****** customers.

*** ** **** ****** to ** ******** / hurt ** **** **** as ** ******* * mega-competitor *** ****.

Comments (28)

John Honovich

IPVM | 08/11/14 02:09pm

Poll:

Undisclosed Integrator #1

08/11/14 02:13pm

As an integrator, ADI hasn't competed against us in bids and sales. Anixter has. One of the reasons we don't do business with Anixter. Now this is a reason not to do business with Tri-Ed. The low end may eventually fall to the box stores and online stores while mid to top tier products and installations may keep to the distributors that don't try to pander to the low end market.

John Honovich

IPVM | In reply to Undisclosed Integrator #1 | 08/11/14 02:17pm

Related: Does Anixter Sell Direct To End Users? YES

Undisclosed #2

In reply to John Honovich | 08/11/14 02:32pm

While most (all?) respectable manufacturers do not support a direct to end user sales model, there ARE times when it's a logical approach. Using a distributor to pass the blame onto is a convienient work-around.

There is a small but growing segment of usually larger end-users that are 100% capable of being their own "integrator". If you want to maintain a traditional security channel, having a distributor that handles these cases can help you maintain your innocence, so to speak.

Whie most manufacturers will state they don't support this, that isn't always 100% true.

Undisclosed Integrator #1

In reply to Undisclosed #2 | 08/11/14 02:39pm

I understand that and can't wholly blame them. Yes, I know there are some very large customers that can handle their own jobs and I can't expect every distributor to be loyal to little 'ole me. But when I keep seeing Anixter on almost every bid, small and large, because they are actively going after it, then that is the bed they make. I'm making no claims on the right or wrong of it except if they try and say one thing and then do another. I.e. the article John referenced above, "Does Anixter Sell Direct To End Users? YES"

Undisclosed #2

In reply to Undisclosed Integrator #1 | 08/11/14 02:43pm

I have not seen Anixter generally go that route, especially because they certainly don't have an installation group. When they are bidding against you so regularly what do you think is the rationale? Are these very small jobs where the end user could conceivably do their own install? Are they bidding at a street price or at a dealer price level?

John Honovich

IPVM | In reply to Undisclosed #2 | 08/11/14 02:45pm

We've already had an extremely in-depth and contentious debate on Anxiter selling to end users.

We are not going to have it here again.

This thread is for discussion of the Anixter / Tri-Ed deal.

Undisclosed Integrator #1

In reply to John Honovich | 08/11/14 02:49pm

...And I have no further wish to go into more detail for our own privacy and agree with John wanting to keep on topic. My comment was only to express our views from a business aspect and what would influence our business relations, and how that would be affected by this aquisition.

Undisclosed Integrator #5

In reply to Undisclosed #2 | 08/12/14 03:47pm

What I've seen them do multiple times over the years is: they sell the end user directly providing all the hardware and if the user needs installation, Anixter calls one of their smaller integrators and has them quote the install only. They once asked me to quote like this but they were dictating the hourly rate at about $20.00 below market and if I wanted the work I had to be willing to do at that price. Forget it!!!! If Anixter wanted to truly support the channel, they would work with the end user to win the design, bring the integrator in at the front end and let them quote the entire project to the end user using Anixter as thier supplier. Whats so complicated about that? If the user is doing thier own install, great - the equipment sale should still go through the integrator and then Anixter will have won points with the integrator community, the user will have a capable integrator to call just in case they run into trouble on the install & need assistance and the integrator is positioned with the user to potentially get future business from them on other service or larger install projects.

Undisclosed #2

08/11/14 02:25pm

I voted this as a "good move", but only for a purely tactical reason on Anixter's part.

They didn't need to buy Tri-Ed in order to target the low end of the market. Anixter could have just as easily cut their prices, or utilized Accu-Tech as the budget arm. I think Tri-Ed's holding company wanted to get rid of that business and Anixter snagged them just to keep ADI or someone else from doing so.

I don't see the distribution business having a lot of glamorous future. These days product demand and educated is handlied directly via online marketing. There was a time when a large proportion of distributor sales/order guys were seasoned (at least somewhat) and they would be the best practical outlet for advice on parts and products. These days I don't really see the same thing, you have a lot of people that have never actually worked in any outside capacity and they're regurgitating the same perspective you can get from a manufacturers website.

Distribution outlets are handy for integrators that don't want or need to stock a lot of product and spare parts. But it's silly to think that distributors have a lot of influence in the broader market perspective. Sure they might get lucky and actually drive a project but it's more along the lines of "even a blind squirrel sometimes finds a nut".

This purchase is a good short-term move for Anixter. They'll pick up some business via Tri-Ed, and they'll probably be able to cut a LOT of duplicate jobs and consolidate some offices and locations. But we're not going to see Anixter (or any other similar distributor) suddenly emerge as a force in the industry.

Avatar

Brian Rhodes

IPVMU Certified | 08/11/14 02:47pm

One thing that sticks out to me as telling is the purchase price is less than a single year revenue. ($420M vs $570M)

Just how miserable are profits for security distributors anyway?

John Honovich

IPVM | In reply to Brian Rhodes | 08/11/14 02:54pm

Answer: Pretty miserable.

Good surveillance manufacturers typically get 2x or more.

Axis is at 3x, Avigilon 4x, etc.

Undisclosed Distributor #3

In reply to Brian Rhodes | 08/11/14 02:58pm

Not great, I'll tell you that much. It's a cutthroat business with razor thin margins. As Undisclosed A said upthread, eventually the low end is going to be all online and big-box places.

Undisclosed Manufacturer #4

08/11/14 03:33pm

I think that this is a good move for Anixter.

We sell to both distributors and their business model is completely different. I think Anixter has a lot of difficulty with the traditional security dealers because of their lack of showrooms/counter sales and their reliance on phone sales only. This is completely different from Tri-ED/ADI where a dealer can walk in and have a coffee while buying 7 motion detectors, a door contact and a DSC panel.

This provides Anixter with a traditional security distribution presence, one that is firmly ensconced in the mass of dealers selling alarm/access/video.

Long-term, I think that Anixter will run the security business in parallel with their wire-and-cable businesses and not integrate them together at the branch level. I would not be surprised if Anixter folded their security specialists into the Tri-ed mix and renamed the whole thing "Anixter Tri-ed" (until the Tri-ed name disappears completely in a few years).

All-in-all a good move for Anixter and at a good price, too (considering the cost savings they will have once both organizations start cleaning house...)

Rukmini Wilson

In reply to Undisclosed Manufacturer #4 | 08/11/14 08:23pm

From what your saying it sounds like almost as good a fit as you can have with two large players in a mature industry.

And though Tri-Ed's business model is much more like ADI than it is Anixter's, we shouldn't automatically assume that an ADI - Tri-Ed deal would provide more value than the Tri-Ed Anixter one. Certainly there could be an easing of price pressure for ADI if they acquired a low-ball competitor, but since they share many of the same customers already, the new customer sales upside is not as great. So it makes sense that Anixter would pay more than ADI would, though if ADI had any idea of the deal, they would have bid just to keep the price as high possible for Anixter.

and renamed the whole thing "Anixter Tri-ed"...

I say no, it invites the rejoinder: " and Fail-ed." Unless of course they also acquired a company named "True". :)

Avatar

Ari Erenthal

Chesapeake & Midlantic | In reply to Rukmini Wilson | 08/11/14 08:28pm

I say no, it invites the rejoinder: " and Fail-ed." Unless of course they also acquired a company named "True". :)

Trunkslammorama.

Undisclosed Manufacturer #4

In reply to Rukmini Wilson | 08/11/14 09:38pm

Funny!

Avatar

Daniel Tyrrell

In reply to Undisclosed Manufacturer #4 | 08/12/14 12:33am
The Tri-Ed in my area is so understaffed compared to ADI, I sure hope they shift some staff from Anixter to Tri-Ed lol

Pat Villerot

08/12/14 12:58pm

Does the slammer reference pertain to them selling to trunk slammers? I've never used nor heard of them.

John Honovich

IPVM | In reply to Pat Villerot | 08/12/14 01:51pm

Tri-Ed? Yes. I am sure some buy parts from local branches when they need something right away but most real integrators are not depending on Tri-Ed for much more than that.

And Tri-Ed's revenue breakdown (summarized in the above post) supports that.

Avatar

robert tabbara

08/12/14 01:12pm

The best part about this is that Dropcam sold for $130M more. I know that these are two different busniess but that is still cool. I know we make fun of trunckslammers here but they are a healty part of the the ecosystem. Becuase they made security super cheap, that helped mature the industry and create truck slammer manfactures in China that can compete with bid greedy big manfactures.

John Honovich

IPVM | In reply to robert tabbara | 08/12/14 01:49pm

Yes, Dropcam sold for $130 million more on probably less than 1/10 of Tri-Ed's revenue. Quite a contrast...

Daniel Nissan

08/12/14 02:35pm

What will happen with brand representations overseas from Tri-Ed? Will Anixter be able to sell them in all of their overseas branches?

Undisclosed Manufacturer #6

08/12/14 04:22pm
This is just more uninspiring news from the security industry. The "demand creators" (yeah right) at Anixter join forces with the tired old "box movers" at Tri-Ed...this is so entirely uninteresting to me that I just had to chime in. I'm sure the counter guys at ADI are thrilled though. Um, as thrilled as those guys get, anyway.

Dan McGlathery

IPVMU Certified | 08/12/14 04:29pm

I was thinking Security-R-Us would be a good new name.

John Grocke

08/12/14 04:50pm

This best analogy that comes to mind is a large grocery store chain buying a convenience store chain.

Yes, they both sell milk, soda, eggs, chips, diapers, and dog food, but two different strategies and delivery methods.

If you want to buy everything for a large Thanksgiving dinner, you go to the grocery store (Anixter). If you need a loaf of bread in a hurry, go to the corner quickie mart (Tri-Ed).

Undisclosed Manufacturer #7

08/12/14 06:38pm

Typical deal for a maturing industry. Basically they preform no valuable product or service. No local stock. No local service. Once you see a decline on the number of feet on the street, then it will change to a more mfg to integrator modle. Lets ask Lenel how it owrks for them. How the market further fractures will be the telling blow.

Remember plug and play has its down side for integrators. These move are working for the benifit of the end user and mfg. Again this is just my opinion. Look at the consolidation of Camera companies and VMS mfg.

Eventually online purchases will prevail to be the bank for this industry.

Rukmini Wilson

08/13/14 10:23pm

We estimate that combined they will account for ~20% of security product sales in the US.

Of product sold thru distribution or overall?

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