Distribution Solutions Group announced Oct. 5 a proposed $700 million senior notes offering to help finance its pending take-private transaction with LKCM Headwater Investments.

Eclipse Acquisitions Merger Sub, a newly formed company controlled by LKCM, plans to issue the notes, which would mature in 2032. The offering remains subject to market and other conditions.

Proceeds would initially be held in escrow pending satisfaction of conditions, including completion of the merger. DSG would then assume the notes, with subsidiaries obligated under its existing credit agreement serving as guarantors.

Combined with an equity contribution from LKCM, the proceeds would fund the share purchase, repay a portion of DSG’s existing credit agreement debt, cover transaction expenses and support general corporate purposes, including future acquisitions. The merger remains subject to customary closing conditions, including shareholder approval.

The financing follows the take-private agreement announced July 16, under which LKCM affiliates agreed to acquire all DSG shares they do not already own for $35 per share in cash. LKCM owned approximately 79% of DSG’s common stock when the agreement was announced.

That price was 18.6% above LKCM’s initial $29.50-per-share proposal submitted in March and represented an approximately 81% premium to DSG’s closing share price before that proposal became public.

Upon completion, DSG would become wholly owned by LKCM and its affiliates, and its shares would cease trading on Nasdaq.

Fort Worth, TX-based DSG formed in April 2022 through the combination of Lawson Products, Gexpro Services and TestEquity. Its businesses serve maintenance, repair and operations, original equipment manufacturer and industrial technology markets.

Other Distributors in LKCM’s Portfolio

• • LGG Industrial (fluid power & material handling)
  • Building Controls & Solutions
  • Applied System Technologies (compressed air aluminum piping systems)
  • Golden State Medical Supply
  • XMEK ( seals, plastics, gaskets and bearings)
  • Flatrock Compression (gas compression parts)
  • BearCom (two-way radios)
  • Alliance Consumer Group
  • MOC Products (aftermarket maintenance fluids & supplies)
  • O2COOL (consumer outdoor cooling)
  • Quality Magnetite