In late February, Bloomfield, CT-based Kaman announced an agreement to acquire fluid power distributor B.W. Rogers, Akron, OH. Steve Smidler, president of the Kaman Distribution Group, recently spoke with MDM about the reasons for the acquisition and plans for integrating the distributor into Kaman’s business.
Kaman’s planned acquisition of fluid power distributor B.W. Rogers, Akron, OH, will allow the company’s distribution group to expand into key markets and geographies where Kaman isn’t strong now and create one of the largest Parker Hannifin distributors.
“The biggest thing is the Parker Hannifin authorization,” says Steve Smidler, president of Bloomfield, CT-based Kaman Distribution Group. B.W. Rogers has 20 authorized Parker locations, including 12 ParkerStores, Parker Hannifin’s branded storefront concept.
B.W. Rogers had sales of about $113 million in 2013.
Deepening the Parker Relationship
Kaman became a national Parker reseller with its acquisition of Catching FluidPower in December 2011.
Smidler calls that initial agreement with Parker a “test” of sorts. “They wanted to make sure that we were fully committed in our base business (to supporting Parker),” he says. Parker can’t say who a distributor can sell the business to, but it can control whether the distribution authorizations go with that acquisition. For example, Kaman’s acquisition of B.W. Rogers excludes part of its automotive business because of a manufacturer’s authorization.
Parker is careful about which companies it aligns with, Smidler says, so acquiring a long-standing Parker distributor such as B.W. Rogers takes a high level of coordination with the fluid power manufacturer.
B.W. Rogers is one of the oldest Parker distributors, a relationship that goes back to 1947. “There’s a great legacy relationship there that we want to capitalize on,” Smidler says.
After closing the acquisition, Kaman Distribution Group will have more than 40 locations authorized as direct Parker distributors and about 200 locations aligned with Parker through the national reseller agreement. The company hopes to expand that further as other opportunities arise.
“Ideally we want to be a preferred acquirer (of Parker distributors) if an owner decides they want to make a change,” Smidler says.
The acquisition of B.W. Rogers will provide a platform for expanding into the energy (specifically oil & gas) and automotive markets, two key markets where the distributor currently has a “negligible” presence, according to Smidler.
As a percent of revenue, the two markets will still be relatively small for Kaman – “well in the single digits,” according to Smidler – but strategically, they offer solid opportunity for long-term growth.
“Automotive can be cyclical, but a lot of people have benefitted from the uptick in investment coming out of the recession,” he says. “And we just didn’t have a presence in that space.”
With the current boom in shale oil and gas exploration, opportunities for distributors in those markets abound. Getting a foot in the door with B.W. Rogers’ presence in the Marcellus Shale Play in Pennsylvania provides opportunity not only for the fluid power part of Kaman’s business, but also for its other segments.
The acquisition will also expand Kaman’s geographic reach. B.W. Rogers has 21 locations in seven states, including a strong presence in Michigan where Kaman had no locations outside of the Upper Peninsula. “It’s definitely a key industrial state,” Smidler says.
In addition, it brings Kaman into four additional top 100 markets. “It’s geographically optimal in terms of business relationships and locations,” he says.
Integrating B.W. Rogers
B.W. Rogers will become the platform company for Kaman’s fluid power segment upon close of the deal, with plans already in place to roll up previous fluid power acquisitions into B.W. Rogers.
“They will become the ones that will really manage our fluid power platform,” Smidler says.
B.W. Rogers will also benefit Kaman’s automation and electical product lines. “It’s a great alignment, so that made it really attractive to us,” Smidler says.