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In 2009 and 2010, much of the acquisition activity in distribution focused on distressed companies. Sure there were several deals focused on bringing top-notch companies together (such as the acquisition of Bradco Supply by ABC Supply), but the overarching tone was moving the recovery forward.
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This year, activity seemed targeted more at strategic alignment, whether that meant picking up companies in new geographic areas – domestic and international, bolstering areas where the company has the greatest strength, or adding new products to the mix.
Here are the biggest deals of 2011 in wholesale distribution that MDM covered across sectors, based on impact to industrial distribution markets:
Think we missed something? Share it in the comments section below!
As MDM Publisher Tom Gale wrote shortly after the deal was announced, the news that HD Supply was selling its HVAC/Plumbing business to Hajoca had a few interesting side stories to it, including HD Supply's continued downsizing post Home Depot ownership and, perhaps more interesting, the challenge in industrial distribution of operating across diverse sectors. The question remains: Can one company consolidate industrial distribution?
ERIKS NV, a Netherlands-based industrial distributor, including fabricated hose, cut gaskets and sealing products, recently acquired Lewis-Goetz & Company, a nearly $400 million (estimated for 2011) Pittsburgh-based distributor that is No. 23 on MDM's list of the top 40 industrial distributors. The acquisition puts Lewis-Goetz in a new position both financially and strategically, and brings ERIKS' annual North American sales to more than $700 million. North America is now ERIKS’ largest market.
3. Sonepar Acquires OneSource Distributors and Independent Electric Supply
Sonepar, No. 1 on MDM's 2010 list of the top electrical distributors, stepped up expansion into California this fall with the acquisitions of two other companies on that list: No. 22 OneSource Distributors, Oceanside, CA, and No. 20 Independent Electric Supply, San Carlos, CA.
Other divisions of the France-based global distributor were also active in 2011, including Sonepar Canada's acquisition of SESCO/QUESCO from HD Supply Canada.
International markets became a target for many U.S. distributors looking for new, stable growth opportunities. One of the largest such deals was Grainger's acquisition of European fasteners distributor Fabory for $344 million. "Fabory provides a unique opportunity for Grainger to enter one of the world's largest MRO markets through an established and growing business," said Jim Ryan, Grainger president and CEO. Read more: MDM Interview – Grainger International President on Expansion in Europe
5. Wolseley Sells Off Stock Building Supply, Build Center & Electric Center; Ferguson Continues to Acquire in U.S.
HD Supply wasn't the only distributor focused on streamlining its operations; European distributor Wolseley announced the sale of its UK-based Build Center to Saint-Gobain and its UK-based Electric Center to Edmonton Electrical. In addition, the company sold its remaining stake in Stock Building Supply – an investment it wrote off in 2010 – to the Gores Group, the private equity firm that has held a majority stake in the U.S. building materials distribution company since 2009.
6. BlackHawk Industrial Continues to "Buy-and-Build"
In 2010, BlackHawk Industrial Distribution, Inc. was formed by Bill Scheller, former CEO of industrial master distributor ORS Nasco, and Brazos Private Equity Partners, LLC, a Dallas-based private equity firm, to implement an active buy-and-build strategy in the industrial distribution market.
The company completed one acquisition in 2010, but exploded on the scene in 2011 with the following acquisitions:
- Tool Service Corp., Tool Fabrication Corp. and Fluid Services Corp.
- Sanders Tool Supply
- Fuchs Machinery
- Rogers Industrial Supply
Private equity firm Advent International, has acquired Morrison Supply Company, Fort Worth, TX, a distributor of plumbing and HVAC supplies. Morrison has 77 branches and showrooms in Texas, New Mexico, Oklahoma, Louisiana, Arkansas and Kansas. Chip Hornsby, an Advent operating partner and former CEO of Wolseley, joins Morrison as CEO.
8. Ongoing consolidation in the building materials markets. Arguably one of the hardest hit sectors during the recession and one of the slowest to recover, the building materials market saw a lot of consolidation in 2011.
- Allied Building Products acquired Austin Acoustical Materials, Astro Building Supplies, Ivan Supply Co., PacificSource, and a branch of American Wholesale.
- US LBM Holdings continued to build its portfolio by adding Lyman Lumber and John H. Myers & Son.
- Beacon Roofing Supply took aim at Canada for expansion, buying Enercon Products and The Roofing Connection. Beacon Roofing also acquired Denver, Colorado-based Fowler & Peth.
9. PT/Bearing Markets Continue to Consolidate
In addition to several big manufacturer acquisitions in the power transmission/bearing sector, distributors continued growing by acquisition in these markets. Some are looking to grow geographically – including in Canada – and some in these markets are expanding their product reach into industrial supply and fluid power.
- Kaman was among the most active, with the acquisition of Plains Bearing Corp., Target Electronic Supply, and subsidiary Minarik’s acquisition of Automation Technology.
- Purvis Industries bought Bearing Solutions, adding to its growing business.
- BDI grew with the acquisitions of PneumaTrek National and Gopher Bearing Company, as well as a new branch in Texas.
- Applied Industrial Technologies acquired companies in Texas and in Canada.
- Motion Industries continued on the acquisition trail with the acquisitions of Dayton Supply & Tool Company and D.P. Brown.
This much-discussed deal fell through. As Airgas CEO Peter McCausland told MDM in an interview after the bid withdrawal: "We weren't opposed to a sale of Airgas; we were opposed to the proposed steal of Airgas…" After the hostile takeover bid fell through, Airgas returned to its former pace of with at least three acquisitions this year. “We’re looking for a return to normalcy when it comes to acquisitions,” McCausland told MDM.
Have other deals that impacted your market? Share it in the comments section below!