Wholesale distribution M&A accelerated in 2017 as both financial and strategic buyers made moves of varying sizes and across all sectors, and a handful of these deals is sure to shift the competitive balance in their respective verticals.
Private equity was especially active last year, with firms buying large players such as Staples Inc. and divisions of HD Supply and Ferguson. The building materials & construction and electrical sectors also saw some strategic moves among the largest companies.
Here are some of the top M&A deals of 2017, based not just on dollar amount but also on their impact on the industry and/or sector:
1. Beacon Roofing Supply to Acquire Allied Building Products – Beacon’s $2.6 billion purchase of Allied will create a roofing and building materials distributor with $7 billion in annual sales and a footprint in all 50 states and six Canadian provinces. It should also help Beacon climb another spot on MDM’s Top 10 Building Material & Construction Distributors list.
2. McNaughton-McKay Agrees to Acquire The Reynolds Co. – This deal unites two of the largest companies on MDM’s list of the Top 25 Electrical Distributors. McNaughton-McKay was No. 13 on last year’s list, with annual sales of $725 million. Reynolds was No. 15 with annual sales of $534 million.
3. Stanley Black & Decker Agrees to Acquire Craftsman Brand from Sears – Stanley Black & Decker’s $900 million purchase of the Craftsman brand from Sears will allow it to manufacture and sell Craftsman-branded products in non-Sears sales channels. Be sure to check out MDM Publisher Tom Gale’s analysis, Craftsman Deal: Sears Throws Monkey Wrench in Room.
4. HD Supply Agrees to Sell Waterworks Business Unit – Another year, another divestment for HD Supply, which sold its waterworks business to private equity firm Clayton, Dubilier & Rice for $2.5 billion. The move left the Atlanta, GA-based distributor with only its facilities maintenance and construction & industrial businesses. Waterworks is now known as Core & Main and is based in St. Louis, MO.
5. Staples Agrees to be Acquired by Sycamore Partners – Private equity firm Sycamore Partners and Staples entered into a merger agreement in which investment funds managed by Sycamore Partners acquired Staples in a transaction that values Staples at $6.9 billion.
6. IPH Group Sold to Advent International – IPH Group, a Lyon, France-based distributor of industrial supplies, was sold to private equity firm Advent International, which said it would merge IPH with Brammer. The deal significantly shifts the distribution competitive landscape for power transmission, MRO and flow technology products across Europe.
7. Ferguson Agrees to Sell Endries to Nautic Partners – Another private equity deal last year saw Ferguson Enterprises unload its fastener division, Endries International Inc., to Nautic Partners LLC. Endries is a distributor of fasteners and Class-C parts serving industrial OEMs worldwide.
8. Linde, Praxair Sign Business Combination Agreement to Merge – This is the second year that the Linde-Praxair deal made the top M&A list, but only because the $70 billion merger is so mammoth and has been so drawn out that it spanned two calendar years. Linde AG and Praxair Inc. in June formally entered into a definitive business combination agreement to come together under a new holding company through an all-stock merger of equals transaction.