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United Stationers Inc., Des Plaines, IL, announced that its Lagasse, Inc. subsidiary signed a definitive purchase agreement with the shareholders of Sweet Paper Sales Corp. and with Sweet Paper Sales Group, Hialeah, FL.
The Sweet Paper companies are privately held, with combined annual sales of approximately $250 million. Sweet Paper currently offers 10,000 janitorial/sanitation, paper and foodservice products to approximately 5,000 distributors in 23 states. The companies are regionally focused in the Southeast, California, Texas and Massachusetts. Sweet Paper operates from ten distribution facilities. The transaction is expected to close in the second quarter of 2005, subject to customary closing conditions.
United Stationers is North America's largest broad line wholesale distributor of business products, with net sales of approximately $4.0 billion. Main product categories include traditional office products, office furniture, technology products, and janitorial and sanitation supplies. It sells to 15,000 resellers, including office products dealers, mega-dealers, contract stationers, office products superstores, computer products resellers, office furniture dealers, mass merchandisers, mail order companies, sanitary supply distributors, drug and grocery store chains and e-commerce merchants.
About 44% of United Stationers' sales in the most recent quarter were for technology products, traditional office supplies were 30% of net sales, with the janitorial and sanitation product category accounting for 12% of sales. Office furniture accounted for 12% of sales as well. Overall, the company's gross margin rate for its first quarter of 2005 was at 14.8% of sales.
"Our janitorial/sanitation subsidiary, Lagasse, Inc., continues to be one of the most successful areas of our business and represents one of our fastest growing product categories," said Richard W. Gochnauer, president and CEO of United Stationers.
"The acquisition of Sweet Paper will expand our presence in the high- growth foodservice product market where we have already achieved positive results. We believe there is a good strategic and cultural fit with Lagasse. Sweet Paper is a well-run, profitable company, with outstanding people," continued Gochnauer. "We believe the acquisition of the Sweet Paper businesses, which have operating margins slightly higher than United's, will be accretive to earnings in 2006 and will position us well for continued growth and success in this category."
"We see this combination as a wonderful opportunity for Sweet Paper customers, suppliers and employees," said Michael Scheck, president of Sweet Paper. "Lagasse has established an excellent reputation as a leading wholesaler of core janitorial and sanitary supplies, while Sweet Paper has established a reputation as a premier redistributor of foodservice and paper products. We have built our business on our expertise and through the personal relationships we have with each of our customers and suppliers. We now have an opportunity to expand our geographic reach through the Lagasse team that believes in the same value of personal service that we do."
"We are very pleased to become a part of a larger company with Lagasse's capabilities. Our family welcomes the opportunity to work with the Lagasse team as we bring a broader product offering, category knowledge and enhanced service to Lagasse," Scheck added.