Border States Industries, Fargo, N.D., moved to increase its presence in the Southwest and enter the Mexican market by signing a letter of intent to purchase Gorman-Bruce Electric Supply Co., Inc., El Paso, Texas, for an undisclosed sum.

Both companies are Allen-Bradley distributors operating with some service area overlap in the Southwest. Gorman-Bruce owner Steve Bruce said the proposed sale is a good fit with Border States' territory. "It's contiguous. They were in New Mexico and it's part of the same region," Bruce said.

Border States was one of at least three Allen-Bradley distributors involved in negotiations with Gorman-Bruce over the past few months, said a source close to the negotiations.

The sale, upon completion, is expected to provide a gateway to Mexico for Border States, said Greg Hoffelt, Border States' vice president for marketing. Gorman-Bruce has branch offices in Juarez and Chihuahua, Mexico.

"It's something we have been on the fringe of with our Arizona operation, and we do a little bit of business with Mexican entities," Hoffelt said. "We're realistic with NAFTA and what appears to be the eventual, more general opening of the Mexican economy to businesses like us. We had to make that plunge at some point."

Hoffelt said Border States has "no immediate plans to change anything," including the Gorman-Bruce name and personnel.

The acquisition adds yet another Allen-Bradley distributor to the membership roster of Affiliated Distributors, Wayne, Pa., to which Border States belongs. Gorman-Bruce is a member of IMARK Group, Oxon Hills, Md.

Gorman-Bruce has 15 employees and about $5.5 million in annual revenue. Border States is the nation's 16th-largest electrical distributor with 560 employees and $240 million in 1996 sales. Border States' regional senior vice president, Bob Gill, will oversee Gorman-Bruce as part of the company's Southwest operations.