HD Supply Will Separate into Two Companies - Modern Distribution Management

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HD Supply Will Separate into Two Companies

Facilities Maintenance will retain HD Supply name, Construction & Industrial-White Cap will separate.
HD Supply Home Improvement solution store in South San Francisco Bay Area; HD Supply, Inc. is an industrial distributor in North America

Industrial distributor HD Supply Holdings, Inc. on Sept. 24 announced it plans to separate its Facilities Maintenance and Construction & Industrial businesses into two independent publicly traded companies. The separation is expected to be completed by the middle of fiscal year 2020, according to the company.

“After years of growth, Facilities Maintenance and Construction & Industrial have achieved sufficient scale to operate as independent companies,” says Joe DeAngelo, chairman and CEO of HD Supply

The separation will take place through a distribution that is expected to be tax-free to HD Supply shareholders. The Facilities Maintenance and Construction & Industrial businesses already operated as largely independent companies, HD Supply reports. The businesses will both remain headquartered in Atlanta.

Once separated, each company is expected to be publicly listed and traded on a nationally recognized stock exchange, the company said. Future goals for each business include pursuing organic and acquisition-based growth opportunities. 

“Each business is now positioned as a leader in its respective market and has the ability to enhance its competitive advantage by further differentiating its best-in-class customer service through additional focus,” says DeAngelo. 

Future Structure 

Facilities Maintenance will retain the HD Supply name and ticker symbol. The Facilities Maintenance business will continue to focus on providing MRO products, value-add services and custom products to multifamily, hospitality, healthcare and institutional property owners and managers, according to the company. HD Supply Facilities Maintenance generated approximately $3 billion in Net sales in fiscal 2018, ended Feb. 3, 2019.

DeAngelo will serve as chairman and CEO of HD Supply Facilities Maintenance, while current HD Supply CFO and Chief Administrative Officer Evan Levitt will serve in the same capacity for HD Supply Facilities Maintenance. Brad Paulsen, current president of Facilities Maintenance, will retain his role.

Construction & Industrial-White Cap business will continue to provide concrete accessories and chemicals, tools and equipment, building materials and fasteners, erosion and waterproofing and safety products to professional contractors in non-residential, residential and industrial applications, according to the company. Construction & Industrial generated approximately $3 billion in Net sales in fiscal 2018, ended Feb. 3, 2019.

Also see: HD Supply’s Second Quarter Sales up 1.4%

John Stegeman, current president of Construction & Industrial, will serve as CEO, and Alan Sollenberger, current chief operating officer of Construction & Industrial, will retain his role.

HD Supply reports that upon completion of the separation, each company will have its own management team and an independent board of directors that will include members of the current HD Supply Board of Directors. Additions to the management teams and members of the boards of directors for both companies will be named in the months leading up to the formal separation, the company says.

HD Supply serves approximately 500,000 customers through approximately 270 branches and 44 distribution centers in the U.S. and Canada with approximately 11,500 associates.

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