The 2020 Mid-Year Economic Update_long

Day: May 14, 2008

M&A Deal Activity in Industrial Products Slows

Weakness in the U.S. economy continues to affect M&A deal activity and value in the industrial products sectors, specifically industrial manufacturing, chemicals, and metals, according to a series of PricewaterhouseCoopers LLP first quarter M&A reports.

While deal activity remains steady, deal volume and value is not on pace to exceed 2007 levels; however, the number of deals announced during the quarter is on track to meet or exceed 2006 levels.
 
The slowdown in the pace of large deals announced in the first quarter is a direct reflection of the difficult financing environment. Only the transportation &logistics sector is on pace to exceed the level of large deals in both 2006 and 2007. Deal interest for targets in Asia has been particularly strong during the ...

HD Supply Waterworks Opens New Facility in Georgia

HD Supply Waterworks, an HD Supply business, has opened a 15,000-square-foot facility in Brunswick, GA.
 
The new location features a warehouse, office space and tool showroom. The company has also consolidated two existing local branches into its Savannah-area facility in Pooler, GA.
 
The Brunswick and Savannah locations also feature tool showcases, stocking items such as pipe slings and cutters, diamond-tipped saw blades, ladders, shovels, trowels and a wide array of other products utilized in the Water and Sewer industry.

HD Supply Waterworks distributes water, sewer, fire protection and storm drain products, integral to building, repairing and maintaining water and wastewater systems.  It currently operates more than 260 branches in 41 ...

Associations Face Value Challenges

Distribution associations, like most of their members, have been challenged to redefine and focus the value they deliver. Many associations have initiated a strategic planning process to address shrinking membership and participation due to industry consolidation, as well as new competition in the form of marketing groups and other alternate education resources, including trade publications.
 
I recently attended the Fluid Power Distributors Association (FPDA) annual meeting, where they unveiled the results of a three-year strategic planning process. The fluid power industry has been particularly challenged as new electro-mechanical technologies have rapidly developed. In a nutshell, they are aiming to elevate the networking and education value the association can offer, while ...

Building Materials Holding to Discontinue AZ Framing/Concrete Operations

Building Materials Holding Corp., San Francisco, CA, a provider of building materials and construction services to professional residential builders and contractors, announced that is wholly-owned subsidiary SelectBuild Arizona will discontinue its residential framing and concrete operations in Tucson, AZ, on July 18.
 
The difficult decision to discontinue our residential framing and concrete operations in Tucson is a necessity based on today's challenging business environment and weakness in the Tucson housing market," said President Stanley M. Wilson. "Housing permits in the Tucson market have fallen sharply from 1,349 in the first quarter of 2007 to only 738 in the first quarter of 2008. Tucson has been hit particularly hard by the downturn in the housing market, and we ...

Applied Industrial Agrees to Buy Mexican Firm

Applied Industrial Technologies, Cleveland, OH, has agreed to acquire Suministros Industriales Enol, S.A. de C.V. and its group of companies.
 
Enol is one of Mexico's largest distributors of power transmission products including bearings, hydraulic hose, electric motors, conveyor products, and lubricants, and had sales of US$25 million in 2007.
 
It operates 10 service centers in Saltillo, Monterrey, San Luis Potosi, Queretaro, Silao, Toluca, Tlalnepantla, Puebla, Tehuacan, and Merida. The company has 145 employees and serves a broad segment of industrial customers including steel, cement, pulp and paper, sugar, and others.
 
With this acquisition, Applied Mexico will serve Mexican industry through 17 service centers and three sales offices in 13 ...

Human Due Diligence’ in M&A

A recent article in the Wall Street Journal (subscription required) says that executives who don't conduct thorough "human due diligence" before completing an acquisition can suffer "steep long-term attrition."

One featured researcher says that in a recent study, he found targeted companies lose close to 21% of their managers each year, more than double the turnover experienced in non-merged firms, for at least 10 years after an acquisition. The article goes on to say that though no two companies manage employees and operations in exactly the same way, the more their decision-making styles and value overlap, the more they will benefit from the merger. ...