Consolidation lurks in PT sector

By Staff -- Industrial Distribution, 2/1/1999

CONSOLIDATION CONTINUES TO SHAKE the distribution industry, and nowhere is that more evident than in the power transmission sector. The PT industry is led by three major players -- Motion Industries, Applied Industrial Technologies and Kaman Industrial. After that group, there are a handful of distributors with revenues of more than $100 million, followed by a host of smaller independents.

The independents continue to join forces with the giants. Late last year, Bush-Miller, a $25 million PT house located in York, Pa., was purchased by Motion Industries. Rumors have swirled for months that Merriam, Kans.-based IBT, with revenues of $119.6 million in 1997, and Omaha, Nebr.-based Precision Industries ($147.1 in revenues) are being pursued by acquirers.

Stephen Cloud, president of IBT, told ID in November that his company is not for sale. Precision Industries president Dennis Circo, acknowledging that he expects 1999 sales to grow to $250 million, says his firm isn't for sale either, although he admits to receiving constant offers. Precision is believed to be highly sought after because of its integrated supply capabilities.

I would say we get about three letters a week," says Circo. "A lot of those people are tire kickers, or brokers trying to find a company willing to sell, but we get one or two serious offers per month, either financial or strategic inquiries for us to do something. We're pretty happy doing what we're doing. At the present time I don't have any intention of [selling]."

That may be the case, but as market valuations for distributors continue to climb higher and higher, some owners intent on remaining independent may think otherwise. "We felt the market was certainly right for us to make the move at this time," says Miller, acknowledging that his firm was also courted by Kaman and Applied Industrial technologies. "We worked out a very good deal with [MI]. I think they believe we will prove very profitable for them.

"I know from talking with Motion Industries and Applied, and we also spoke with Kaman, that there is a lot of activity out there. All of the major companies are receiving a lot of unsolicited offers for selling."

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