Editor’s Note: Friday’s MDM Update newsletter subject line erroneously said Distribution Strategy Group instead of Distribution Solutions Group when referring to this news. We apologize for the error and any confusion it may have caused.

Distribution Solutions Group has reached a definitive agreement to be taken private by its controlling shareholder, LKCM Headwater Investments, a little more than four years after DSG was assembled as a publicly traded specialty distribution platform.

Fort Worth, TX-based DSG announced July 16 that newly formed entities controlled by LKCM will acquire all outstanding shares that LKCM and its affiliates do not already own for $35 per share in cash. LKCM currently owns approximately 79% of DSG’s common stock.

Upon completion, DSG will become wholly owned by LKCM and its affiliates, and its shares will no longer trade on Nasdaq.

The agreed price is $5.50 per share, or 18.6%, above LKCM’s initial offer of $29.50 submitted to DSG’s board in March. It also represents an approximately 81% premium to DSG’s March 13 closing price of $19.31 — the final trading day before the original proposal became public.

The agreement values DSG at approximately $2.4 billion, with LKCM expected to pay roughly $500 million for the remaining stake it does not already own.

On MDM’s 2026 Top Distributors Lists, DSG charted at No. 11 for MRO Industrial, No. 12 for Fasteners and No. 19 for Industrial Supplies.

From Proposal to Agreement

DSG disclosed March 16 that LKCM had submitted an unsolicited, nonbinding proposal to acquire the remaining shares. That offer represented a 52.8% premium to DSG’s unaffected stock price and valued the company at approximately $2 billion, according to LKCM’s proposal materials.

Because of LKCM’s controlling ownership and DSG Chairman and CEO J. Bryan King’s role as LKCM Headwater’s managing partner, DSG formed a special committee of independent directors to evaluate and negotiate the transaction.

That committee unanimously approved the final agreement and recommended its adoption by DSG’s board. The board approved the transaction following recusals by certain directors.

Closing remains subject to customary conditions, including antitrust clearance and shareholder approval. Importantly, the deal must receive approval from a majority of votes cast by DSG shareholders unaffiliated with LKCM, giving minority investors a determining vote despite LKCM’s existing control.

The transaction is not subject to a financing condition. DSG said its credit agreement was amended to permit revolving-loan proceeds to help finance the deal.

Other Distributors in LKCM’s Portfolio

• • • LGG Industrial (fluid power & material handling)
    • Building Controls & Solutions
    • Applied System Technologies (compressed air aluminum piping systems)
    • Golden State Medical Supply
    • XMEK ( seals, plastics, gaskets and bearings)
    • Flatrock Compression (gas compression parts)
    • BearCom (two-way radios)
    • Alliance Consumer Group
    • MOC Products (aftermarket maintenance fluids & supplies)
    • O2COOL (consumer outdoor cooling)
    • Quality Magnetite

MDM Analysis

The increased price indicates DSG’s independent directors extracted considerably more value for minority shareholders than LKCM initially offered. The $35 agreement raises the premium to DSG’s unaffected share price from roughly 53% to 81%, while providing shareholders with cash liquidity in a stock that has historically traded at relatively modest volumes.

Strategically, the deal completes an ownership transition that LKCM’s existing 79% stake had already made increasingly logical.

LKCM argued in March that DSG’s long-term plans were constrained by public-market reporting demands, short-term investor expectations and limited operational flexibility. It specifically pointed to opportunities to integrate multiple ERP systems and more freely pursue organic growth and acquisitions outside the public spotlight.

Those priorities are significant for a company built around several distinct distribution businesses. DSG formed in April 2022 through the combination of Lawson Products, Gexpro Services and TestEquity, spanning MRO supplies, OEM supply-chain services and industrial technology products.

The platform generated $1.98 billion in 2025 revenue, up 9.8%, with acquisitions accounting for most of the increase. Organic sales rose 3.6%, though adjusted EBITDA margin declined to 8.9% from 9.7% a year earlier.

Private ownership could give DSG more freedom to absorb near-term integration costs, standardize systems and continue consolidating fragmented specialty distribution markets without having each investment judged against quarterly public-company expectations.