Counselor

Industry Reacts to BEL USA And Branders.com Merger

BEL USA, parent company of supplier BEL Promo (asi/39552) and distributor DiscountMugs.com, has merged with Top 40 distributor Branders.com (asi/145021). Terms of the transaction were not released, but the merger follows an equity investment into BEL USA by capital firm Comvest Partners. Comvest, which is based in West Palm Beach, FL, lists BEL USA on its website as one of its equity investments and the equity company actually initiated the deal with Branders.com and merged its two holdings together under the BEL USA umbrella. As part of the deal, Amin Rahman, CEO of BEL, now becomes CEO of Branders.com as well, and Jerry McLaughlin, the former CEO of Branders.com, has left the company.

“We’re glad to have a new partner in Comvest and excited about their commitment to and vision for the industry,” McLaughlin told Counselor.

While McLaughlin wouldn’t provide sales numbers for his company, he did say that “Comvest acquired certain operations and assets of Branders which account for about $35 million in U.S. sales.” However, with Branders’ guidance previously, Counselor had reported that the company had $131 million in 2012 North American ad specialty sales. Subsequently, Counselor received information that valued Branders’ 2012 sales at $33.7 million, which would rank it number 40 on the 2013 Top 40 list, rather than its original position at number 11.

Rahman told Counselor that Branders.com will maintain its name and will operate as a division of BEL. He also said that the company’s supplier and distributor divisions will operate completely separate of each other. The structure of having suppliers and distributors under the same corporate umbrella, though, has led to questions about future market consolidation and the blurring of the traditional industry sales model.

Marc Simon, CEO of Top 40 distributor Halo Branded Solutions (asi/356000), believes it would be difficult in this market to have a structure of single parent company owning a supplier and distributor firm. “I think it is very difficult for a supplier and a distributor to be owned by the same company,” he told Counselor. “The rest of the distributor community needs to feel comfortable that the sensitive client information shared with the supplier does not become available to the captive distributor. I just don’t know how that comfort can be created.”

Others in the industry have a different take on the deal, like Steve Paradiso, president of ePromos Promotional Products (asi/188515). “The people that were freaked out by Bel before are going to be freaked out now,” he said. “I think this is a pretty exciting opportunity and there are some smart people involved in this. Remember, most big distributors have figured out how to do things direct for a while now, so in some ways this is just an extension of business as usual.”