publicly stated that it regards it as a platform for further
acquisitions in that area.
Large Wholesale Electrical Acquisitions
One of the most surprising and transformational electrical distribution transactions was Anixter’s acquisition of
HD Supply Holding’s Power Solutions business for $825
million (.43x revenues of $1.9 billion). Anixter publicly
announced that the transaction was a strategic move to
sharpen the company’s focus, while also making it more
of a full-line wholesale electrical distributor. This indicates
this acquisition will result in another major potential buyer
for standard wholesale electrical distribution companies as
Anixter deploys some of the $380 million proceeds from
the sale of its fastener unit to fill out gaps in its Prime
Giant diversified $7.9 billion industrial distributor
WESCO International substantially enhanced its position
in the Texas market with the acquisition of HT Capital’s
client, Hill Country Electric Supply, based in Austin. Hill
Country focuses on the commercial construction market
and had revenues of approximately $140 million from nine
locations in central and South Texas. Private equity backed
AMP Electrical Distribution Services enhanced its operations in the Midwest with the acquisition of HT Capital
client Gatto Electrical Supply.
Fluid, Hose & Accessories
Netherlands-based distributor ERIKs continued its aggressive U.S. acquisition program with two purchases.
Lewis-Goetz, the largest U.S. company owned by ERIKs,
acquired Action Industrial Group, an SC-based distributor
of hose, gasket, and fastener products with revenues of
$21.5 million in 2014. ERIKs Seals and Plastics unit, based in
Grapevine, TX, acquired Dallas-based Seals and Packaging,
which expands its product and service offering and oil and
gas customer base.
DXP Enterprises increased its geographic footprint in the
water treatment, municipal water treatment, and desalination markets on the West Coast with the acquisition of
CA-based Cortech Engineering, a distributor of pumps and
other process equipment in California and Nevada.
Applied Industrial Technologies enhanced its fluid
power product and service offerings with the acquisition
of S.G.Morris Co., a distributor of fluid power components,
also known for its technical capability to design and integrate fluid power, motion control, and lubrication systems.
• Safety: Würth Group, the second largest industrial
distributor in the world, acquired Northern Safety and
Equipment, based in Frankfort, NY, a distributor of a
broad line of industrial safety products with estimated
revenues of $180 million. Press release statements by
both Würth and Northern indicate that Northern will
be the platform upon which Würth plans to build a
major safety products distribution company.
• Power Transmission/Bearings: The largest transaction
in the power transmission/bearing segment was Irving
Place Capital’s acquisition of Ohio Transmission Corporation. Founded in 1963, OTC, based in Columbus, OH,
is a distributor of highly engineered power transmission, bearing, motion control, and factory automation
products with 23 branch locations in 12 states in the
Midwest, South, and Northwest. In August 2015, OTC
acquired OH-based Buckeye Pumps.
Assuming that the U.S. economy continues to improve,
we believe that in 2016 and beyond all segments of industrial distribution will experience a high level of merger/
acquisition activity. Most importantly, both strategic and
private equity buyers have substantial cash resources to
support their acquisition programs, and while interest
rates will probably increase somewhat over the next year,
bank financing will still be available at attractive interest
rates. Timing is often everything in the world of mergers
and acquisitions, and we believe that 2016 will be an ideal
time for industrial distribution company owners to explore
the sale of their businesses.
C. A. Burkhardt is Senior Managing Director of HT Capital Advisors, a private investment banking firm. He can be
reached at email@example.com, or 212-759-9080.
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