The 2020 Mid-Year Economic Update_long

June 2017 M&A Roundup: Private Equity Firms Spend Billions on Distribution

Staples, HD Supply's waterworks and IPH Group all sold last month to financial buyers.
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The pace and volume of M&A finally picked up across the industry last month, led by a trio of blockbuster transactions involving private equity firms investing billions of dollars in distribution.

Staples Inc., Framingham, MA – No. 1 on MDM's 2017 list of the Top Jan-San Distributors – agreed to be acquired by private equity firm Sycamore Partners for $6.9 billion.

The company's facilities and breakroom business is among its fastest growing, doubling revenue there in 2016 to $2.1 billion, which bumped Staples to the top of the Market Leaders list. Sycamore Partners plans to divide the company into three entities, according to a report published in The Wall Street Journal.

HD Supply, Atlanta, GA, agreed to sell its waterworks business to private equity firm Clayton, Dubilier & Rice for $2.5 billion. The divestiture is HD Supply's fifth in three years, following sales of its Litemor business, hardware solutions, power solutions and interior solutions.

The company expects it to be another "transformational" move, according to President and CEO Joe DeAngelo. The sale will allow HD Supply to reduce debt and focus on what DeAngelo called "less cyclical" businesses in facilities maintenance and construction & industrial.

Another private equity deal occurred last month – this one overseas – when Advent International acquired IPH Group, a Lyon, France-based distributor of industrial supplies.

Terms were not disclosed, but Advent said it plans to combine IPH with UK-based MRO distributor Brammer to create a company with more than €2.1 billion (US$2.4 billion) in sales. (Read more about the acquisition in MDM Publisher Tom Gale's recent blog, Brammer and IPH to Merge in Major European Deal.)

Based on analyst comments in our recent article, 2017 State of M&A in Distribution: ‘Never Been a Better Time to Sell’, the spate of private equity firms deploying capital isn't surprising.

“Private equity groups have incredibly strong interest in distribution today,” says Reed Anderson, managing director at Houlihan Lokey and head of the firm’s industrial distribution practice.

Here are other key deals that occurred in June 2017:

SRS Distribution Agrees to Acquire SG Wholesale Roofing Supplies

Bunzl Acquires Three Companies in Spain and Canada

Linde, Praxair Sign Business Combination Agreement to Merge

ERIKS Agrees to Sell Fischer to Röchling

Watsco Unit Acquires 35% of Russell Sigler

Mallory Safety and Supply Acquires Safety Distribution Business

Atlas Copco Agrees to Acquire Part of Swedish Mining Business

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