IDP "war chest" leaves lots of cash for more buyouts
Ross-Willoughby's Ron Cory says IDP provides the necessary capital to pursue integrated supply.; Tom McCaslin, of J. Fegely: his firm operated independently for 148 years.
By Staff -- Industrial Distribution, 4/1/1999
Northbrook, Ill.--Industrial Distribution Partners started its consolidation process with a bang last month when it announced the purchase of the Ross-Willoughby Co. and J. Fegely, Inc. At the same time, company executives say the firm has a "war chest" of funds to pursue other companies.No purchase price was announced, although it is believed IDP paid a healthy premium in order to make its initial splash into the consolidating distribution sector.
IDP expects the two firms to generate over $140 million in sales this year. Rudolph Huyzer, chairman and chief executive officer of IDP, hopes to build a $1 billion distribution company within four years. He is targeting general line houses, as well as specialty shops with a focus on PVF, fasteners, safety and rubber products.
Now that IDP has made its initial purchases, Huyzer expects further acquisitions to come along much easier. "I think the announcement will turn a couple of heads," he says. "That's what we all expect." Huyzer admitted that some firms weren't interested in speaking with him until IDP made its first acquisitions.
Huyzer also confirmed that he does not intend to take IDP public anytime soon. "We consider IPOs just another financing vehicle, and we have a war chest available which provides sufficient money to fund the next couple of acquisitions," he says. "So there is no pressure to do a premature IPO."
Ross-Willoughby Co. -- No. 71 in Industrial Distribution's 1998 Top 100 -- had sales of $60.5 million last year. At the time of the report, Ross-Willoughby president Ron Cory expected sales to climb to approximately $85 million this year. Ross Willoughby was also reportedly courted by Industrial Distribution Group, MSC Industrial Supply, and the McGraw Group.
The news came as a surprise to many in the industry, since both the acquired firms have been on the acquisition trail themselves. However, Huyzer says that both firms will continue to act as acquirers as part of IDP. He also indicated that Cory and J. Fegely president Joe Homa will remain on board. McCaslin, chairman of the fifth generation J. Fegely, will remain for a short time in a consulting position.
"Making a couple acquisitions is only the beginning, but I feel fortunate that these two quality companies have selected IDP, because they have been approached by almost everybody and have looked at all of the options," says Huyzer.
As ID reported last September, IDP began approaching distributors last July. Huyzer says he received commitment letters from Ross-Willoughby in December, and from J. Fegely in early January.
Huyzer was unable to predict when IDP would announce its next purchase, although it is believed that Cory is close on several deals to acquire firms under the Ross-Willoughby name.
IDP's acquisitions represent two long-established firms in distribution. Ross-Willoughby was founded in 1912. Cory, president of the firm since 1978, says it was time to partner up with somebody who could offer resources needed to continue integrated supply efforts. "Integrated supply...requires a great deal of resources. Partnering with IDP is the strategic and logical next step in expanding our ability to meet our customers needs."
J. Fegely was established in 1851, 10 years prior to the outbreak of the Civil War, and was in the midst of the fifth generation of family leadership.
"There's a certain sadness to it, in sense that [founder Jacob Fegely's] first business was selling materials to people out of a wagon," says Fegely. "But what we've done ... having a fifth generation business, is a unique feat.
"When we created our business plan, and my vision is almost identical to what IDP is doing, it was a question of do I want to find the venture capital to do it on our own, or do we do something like this. The economics of this seemed a whole lot more beneficial."
Cory said the first priority was to close the sale of his company by March 25. He expects to announce his next acquisition by early June.
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