Buyouts continue, led by Pentacon, MSC
By Staff -- Industrial Distribution, 7/1/1998
Newton, Mass.--The pace of acquistions picked up somewhat in May and June, as MSC Industrial Supply and Penatcon announced deals, while privately held Kaufman Co. was in the process of acquiring Butts & Ordway of Marlboro, Mass.In early June MSC acquired RMG Corp. (Machinery & Supplies) of Appleton, Wisc., and the Drake-Atwood Tool & Supply Co., Inc., Nashville, Tenn. Machinery & Supplies has annual sales of $5-6 million, while Drake's annual sales are about $15 million from four branches.
"These strong regional distributors are recognized leaders in their areas," says Mitchell Jacobson, president and CEO of MSC. "Their commitment to product quality and service excellence, combined with MSC's broad range of resources will result in much faster growth in Wisconsin and Tennessee."
Gene Gallmeier, president of M&S, joins MSC as market manager for Wisconsin. Lane Douglas, general manager of Drake-Atwood, becomes market manager for the Tennessee-Kentucky market.
On May 26, fastener distributor Pentacon, Inc. announced that it had signed letters of intent to acquire two fastener distribution companies with combined annualized revenues of approximately $37 million. The deals are expected to close by the end of the month. At press time, Pentacon had not revealed the names of the firms.
In addition, Pentacon closed on the acquisition of Pace Products, Inc., which has annual sales of $7 million. In total, the three acquisitions have annualized revenues of $44 million.
"We are excited about the first acquisitions since our initial public offering was completed in early March of this year," says Mark E. Baldwin, chairman of Pentacon.
"Each of these transactions will be immediately accretive to earnings and we remain encouraged with the pace of our acquisition program for the balance of the year."
Butts & Ordaway and Kaufman Co. have been talking for two years, according to Butts & Ordway president Fritz Butts. A deal between the two was expected to close on or around July 19.
"It's been a struggle being a single owner of a business, and I just decided it was time to do this," says Butts, whose firm was founded 110 years ago. "All sales functions remain the same inside and out, and I'll have responsibility for this branch."
Butts revealed he had more than one suitor, and that Kaufman was not the highest bidder, but "they had an interest in my employees, and I felt obligated [to them] as an owner," he says. "That's one reason we're doing the buyout. It's based on mutual trust."
Kaufman Co. president Norman Kaufman had no immediate comment. I
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