Jaco buying QPS; Zack, Joseph merging

Electronic News, July 15, 1996 by Bernard Levine, Fred Guinther

New York--The distribution roster continues to shrink, with Jaco Electronics agreeing last week to purchase the assets of Chicago area-headquartered QPS Electronics, Inc., while two minority (female-owned) firms, Zack Electronics and Joseph Electronics, are merging under Zack Electronics.

Jaco signed an agreement to purchase the operating assets of privately-held QPS, whose sales are in the $5 million range. Terms were not disclosed.

QPS was formed in 1985 by Chuck Heerhold and Patricia Perotti, who will remain with Jaco in a managerial capacity. Like Jaco, QPS offers active and passive components, with a sales force serving the northern Midwest through its offices in Schaumburg, Ill., Wauwatosa, Wis., and Westminster, Colo.

"As we stated in our recently completed public offering, we are very interested in growing the company through opportunistic acquisitions," said Joel Girsky, Jaco president/CEO, "and QPS is indicative of our intent to continue to do so, especially given our strong financial position."

The QPS acquisition, Mr. Girsky noted, "will provide Jaco with a firm foundation from which to build its distribution business in the northern Mid-west of the U.S., a region that we have not previously addressed. With the addition of QPS and the creation of our Arizona office earlier this year, Jaco's geographic reach totals approximately 95 percent of the U.S. electronics components distribution business."

The firm is "pleased that Chuck and his team have agreed to join the Jaco organization and are confident that our resources, supplier relationships and existing infrastructure will assist them in achieving our aggressive growth objectives," he added.

While some details are still being worked out, the deal is said to be essentially completed. Mr. Heerhold of QPS noted "the deal is done as far as we are concerned. The attorneys and accountants are all squared away. It is just a question of dotting the Is and crossing the Ts. We are very happy to be going with Jaco. We had other suitors, but I've known the Girskys for years and they are fine gentlemen."

Jaco controller Joseph Gewolb, asked if other acquisitions are expected soon, replied, "If something comes up that makes sense, we would do it. We are always looking."

Concurrently, privately-held Zack Electronics of San Jose, Calif. has acquired Joseph Electronics of Niles, Ill., creating a combined company estimated to be among the top 50 U.S. distributors. Among the lines represented by the merging companies are AMP, Amphenol, AT&T, Augat, Belden, Hitachi Denshi, Matsushita, Philips, Sony, Toshiba, Waldom, Weller/Cooper and Yuasa/Exide.

Both companies are women/minority-owned businesses and the combined firm resulting from Zack's acquisition of Joseph will operate on the same basis. The price of the acquisition was not disclosed.

Zack, established in 1931, and Joseph, in business since 1944, will have combined sales to OEM, MRO and telecommunications customers of $30 to $40 million annually, according to Dennis J. Awad, who has been president of Zack since his Tele-Com Products company, founded by him in 1977, acquired Zack in 1993 and merged under the Zack name in 1994. Mr. Awad continues as president of the new Zack company created by the merger with Joseph, and his wife, Sandra Awad, the majority owner, remains CEO.

Chuck Annella, executive VP of Joseph for the past five years, will hold the same title in the newly formed firm, and will continue to be based in Niles, where he will manage Midwest operations. Before joining Joseph, Mr. Annella held management positions with Allied Electronics, Bell Industries and others. Patricia Ewert, who was CEO of Joseph Electronics, will remain as a consultant. Other management includes Art Simpkins, CFO, and Eric Carneal, formerly with Wassco and Marshall Industries, and who heads catalog development. Headquarters will be in San Jose, with Midwest operations handled from Niles. Other California locations are in Sacramento and Duarte, and there is a warehouse in Memphis, Tenn.

Mr. Awad said, "Joseph Electronics ... will allow us to expand to other areas of the country with additional products and value-added services." Mr. Annella added, "We each focus on the same market segments, share the same vision and practice the same business philosophy."