A Closer Look with [JACK KEOUGH]
42 INDUSTRIAL DISTRIBUTION / September/October 2013 www.inddist.com
Another Look At ID’s Big 50
In glancing through ID’s Big 50 list, it is readily apparent that there
was small organic growth for most industrial distributors and any
real gains came from acquisitions. So it’s no surprise that merger
and acquisition activity has heated up during the past year for
many of the Big 50.
In fact, organic sales for many of these companies have remained sluggish, flat, or in some cases slightly down.
Some of these companies have achieved
remarkable growth due to acquisitions. Take
DXP Enterprises as one example. In the past ten
years, DXP has acquired some 30 companies
and is on the hunt for more opportunities. In
the past few months, DXP has acquired Alaska
Pump & Supply, a pump distributor headquartered in Anchorage, AK; cutting tools and
abrasives specialist Tucker Tool Co. of Mechanicsburg, PA; and National Process Equipment,
a Canadian distributor of pumps, services, and
Airgas, which has been one of the most acquisition-driven companies in the industry, has acquired more than a half dozen distributorships since last December. Two of those were completed earlier
this year. Overall, organic sales growth was flat as its distribution
segment organic sales growth of one percent was offset by the
impact of lower refrigerant sales on the company’s “All Other
In a conference call with analysts, Airgas still says that it will
achieve $150 million in sales from acquisitions during fiscal 2014.
“There are some very good distributors that are considering
sale for reasons other than the economy, (such as) retirement and
lifestyle changes and things like that. So we're trying to focus on
the very best distributors in the country right now, and we're optimistic that we're going to get our share,” said Peter McCausland,
founder and executive chairman of Airgas, in the call.
“Prices are higher than they were a few years ago, and I think
that's partly reflective of the industry's view that we're sort of in
the downside of the cycle in terms of volume and that things will
get better in the future,” he said – according to a transcript of the
call as provided by www.seekingalpha.com.
Kaman Industrial Technologies (KIT, the distribution arm of the
Kaman Corp.) has been involved in a number of acquisitions and
strategic agreements during the past year. KIT has entered into
a strategic agreement to be a distributor
for Schneider Electric, giving them a strong
partner in the electrical and automation side
of the business. Schneider Electric, by the way,
has entered into an agreement itself to buy
Invensys, the British engineering/software au-
tomation/controls company for $5.2 billion.
KIT also entered into agreements with
Wajax Industrial Components in Canada (WIC,
formerly Kinecor) to form a new alliance. This
alliance gives Kaman and Wajax the opportu-
nity to increase business in Canada and Mexi-
co, as well as in the U.S. While Kaman and WIC
will each remain as separate and independent
entities, they will join forces to compete for business-to-business
and supply agreements with customers in multiple jurisdictions,
providing an alternative to country-based supply agreements. The
alliance will operate under the name Sourcepoint Industrial.
In addition, KIT purchased Zeller Corp., which will expand Kaman’s presence in the electrical, automation, and engineered systems areas. Kaman also acquired Florida Bearings, and earlier this
year acquired three other distributorships. All of these deals allow
Kaman, a leading PT/motion control, fluid power distributor, an
expanded new customer base and an entrance into new markets.
And more acquisitions are expected for the company.
If there were any doubts that Wesco should be considered only
an electrical distributor, they have been put to rest over the past
few years as the Pennsylvania-based company has made a series
of acquisitions into other MRO product areas, rather than just
Wesco, as you may know, purchased Conney Safety Products
and is said to have been looking at other same-type acquisitions in