HD Supply’s deal with Watsco falls through

Industrial Distribution staff -- Industrial Distribution, 2/1/2008 6:53:00 AM

“Watsco approached us about this opportunity because they saw the value and profitability of our HVAC business,” HD Supply spokeswoman Erica Crosling told the Web site. “We did, and still do believe, in the viability of this business and its long-term growth prospects. Our intent to do business with Watsco was always dependent upon a deal that made sense for us from a financial standpoint. Unfortunately, we could not reach an agreement that made good financial and business sense for us, as our HVAC business is still very viable and profitable. Our strategy remains to provide the best HVAC and plumbing product offerings and service in the business and to continue to be an industry leader in the HVAC and plumbing space.”

The deal was to have been the second divestment for the Orlando-based building materials distributor since it was acquired by a trio of private equity firms last year.

HD Supply agreed to sell its lumber and building materials division to Denver-based building materials distributor Pro-Build Holdings late last year. Crosling told the Web site that transaction is set to close in February.

Crosling told INDUSTRIAL DISTRIBUTION last week that the downturn in the residential housing market and the termination of a distribution agreement the company had with HVAC product manufacturer Trane Inc. prompted a number of branch closings and layoffs for HD Supply, including five locations in Tennessee and three in Georgia,. She declined to specify how many workers were laid off.

The company also shuttered an HVAC and plumbing supply branch in Mobile, Ala., laying off 12 employees, and another in Tucson, Ariz.

“Like other companies that are closely tied to economic cycles, we are continually looking for ways to better align ourselves and reduce costs,” Crosling told Supply House Times. “Businesses across our industry that focus on residential construction have had to make similar difficult decisions. But we are always focused on first class customer service.”

HD Supply ranked second on INDUSTRIAL DISTRIBUTION’s 2007 Big 50 list of distributors, with 2006 sales of $12.1 billion.