Lawson Products, Inc., Des Plaines, IL, has entered into a definitive agreement to acquire the assets and operations of Rutland Tool & Supply Co., a, California-based subsidiary of Airgas, Inc. Rutland Tool distributes metalworking tools, machine tools and related MRO supplies. Under terms of the agreement, Lawson will pay $15 million cash. Rutland Tool, headquartered in Whittier, CA, operates from seven locations and generated $47 million in sales in its fiscal year ended Mar. 31, 2005.
The closing date for the transaction is expected no later than Dec. 1, 2005. Lawson will fund the acquisition from the proceeds of a sale of a non-operating real estate investment.
Airgas acquired Rutland Tool in 1996. In October 2001, Airgas said it would take a retroactive fiscal first-quarter charge of $59 million for impaired goodwill associated with its Rutland Tool business unit, and was then considering its options for the business, including sale or a joint venture. Airgas said conditions contributing to the impairment of goodwill at Rutland Tool included the significant deterioration of the industrial and machine tool markets since the acquisition and difficulty in achieving expected cross-selling synergies.
Lawson is an international distributor of products, services and systems to the MRO (maintenance, repair and operations) and OEM (original equipment manufacturing) marketplaces.
The acquisition of Rutland Tool is expected to accelerate Lawson's growth strategy by expanding its product lines into the machine tool industry, enhancing its presence in critical Western markets and providing access to a broad range of customers the company doesn't currently serve, said Lawson CEO Robert J. Washlow.
"The acquisition of Rutland represents an excellent strategic fit in a variety of ways," Washlow said. "Rutland's product lines complement our current product lines, and its presence in the important markets in the western part of the country will allow us to more fully develop those markets."
Lawson plans to make an additional investment of capital into Rutland's warehousing and distribution operations within the Los Angeles area, in order to handle growth by Rutland and to localize distribution of product for all the members of the Lawson Family of Businesses. The facilities will also be used as a major entry point for products produced by off-shore vendors and as a packaging center, actions that are designed to improve productivity and more fully develop the sales potential for Lawson's business units in the Western part of the United States.
Furthermore, the acquisition of Rutland and subsequent realignment of the warehousing and distribution facilities are intended to enhance Lawson's ability to service even more customers on a same day or one-day basis. Already, Lawson ships complete, within one day, over 99.5% of all orders received.
A significant share of Rutland's sales is primarily generated from catalogue sales and seven showrooms, channels that Lawson will continue. Rutland locations include Whittier, Chatsworth, Santa Ana and San Jose, in California; Phoenix, Ariz..; Houston, Tex.; and Suwanee, Ga.
"Rutland Tool will be a good strategic fit with Lawson's business," said Airgas Chairman and CEO Peter McCausland. "We wish our people who will join Lawson the best and we are pleased that our two companies will maintain a strong supply relationship with each other."