July 2013 Distribution M&A Roundup: OTP Industrial Solutions, ABC Supply, Kaman & Border States - Modern Distribution Management

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July 2013 Distribution M&A Roundup: OTP Industrial Solutions, ABC Supply, Kaman & Border States

Private equity continues to play a big role in distribution M&A in 2013.

Despite Airgas saying that independents are reluctant to sell right now, we still saw a fair bit of acquisition activity in July 2013, including acquisitions by private equity firms.

Ohio Transmission Corp., which is divided into two business units, OTP Industrial Solutions and Air Technologies, was acquired by private equity firm Frontenac Company. CEO Phil Derrow will retain management of the day-to-day operations of the business, which was family- and employee-owned. It has 18 facilities across the U.S.

While the news announcement of OTP’s acquisition did not specify the distributor’s next steps for growth, in many cases when a private equity firm invests in a regional distributor, the plan is to take the company to the next level.

In fact, the strategy of more and more private equity firm-backed regional distributors often resembles that of larger strategic buyers. “There are still a number of distributors in that space and a lot of runway for them to make acquisitions to grow into more of a national player,” Robert W. Baird & Co.’s Jason Kliewer said in a 2011 MDM article, Private Equity Drives Deal Demand. Investment in a company may also help drive technology investments and other organic growth initiatives.

Read about what matters most in a private equity transaction in distribution.

Read more about consolidation trends in distribution in the 2013 Distribution Trends Report.

Here are other key deals that occurred in July 2013:

In another private equity transaction, Silver Oak Services Partners has acquired jan-san and safety products distributor The Tranzonic Companies.

ABC Supply acquired American Wholesale Building Supply, with a location in Nashville, TN. According to ABC Supply, the siding and windows distributor will allow ABC to respond to a rebound in the new residential construction market in Nashville.

Border States Electric acquired UtiliCor, which serves the utility market of the Tennessee Valley Authority, Arkansas and Missouri.

Kaman Industrial Technologies, the distribution segment of Kaman Corp., has agreed to buy Ohio Gear & Transmission, Eastlake, OH. The acquired business has one location and annual sales of $9 million. The new location adds design, build and assembly capabilities for gearing products in the Cleveland market.

Regional grocery and foodservice distributor and retailer Spartan Stores has acquired national food distributor Nash Finch Company, Minneapolis, MN, in a deal valued at $1.3 billion. The combined company will have $7.5 billion in pro forma annual sales.

Look for MDM's August 2013 M&A roundup in September.

Catch up with more deals in distribution and manufacturing at our M&A news page.

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