Industrial Distribution

Jack Keough

Merger and acquisition activity is heating up
April 13, 2005

Yesterday, WinWholesale, announced it had signed an agreement to buy the Noland Company, one of the largest U.S. distributors of plumbing, electrical, HVAC and mechanical equipment and supplies. WinWholesale will pay $74 for each Noland Company share. Shortly after the acquisition closes, WinWholesale will take Noland Company private. WinWholesale, according to its news release, expects that combined 2005 revenues will exceed $2 billion.

Noland is well-known in our industry and has consistently been on ID’s Big 50, a listing of the largest North American distributors. It operates 101 branches in 13 states.

WinWholesale is a different type of company to say the least. And not many people I’ve talked to know much about it.

WinWholesale, headquartered in Dayton, Ohio, is a collection of nearly 435 companies spread across 41 states and eight industries (including industrial PVF, fasteners, electrical equipment and pumps). Each is run as a separate corporation in which the individual presidents have a substantial equity stake, according to Supply House Times magazine, which named WinWholesale as its 2004 Wholesaler of the Year. It had sales of $1.4 billion in 2004.

The company also has WinWholesale Business Services that assists the individual wholesale companies by providing computer hardware and software, accounting, payroll, distribution and marketing services as a low price. They have regional offices in six locations.

Collectively, when the deal is finalized, WinWholesale and Noland will have more than 5,100 employees in 43 states and carry more than $300 million in inventory.

I’m not aware of any other company that operates as does WinWholesale. Its growth has been phenomenal.

Meanwhile, Ferguson Enterprises and its parent company Wolseley plc ($19 billion in sales) are aggressively acquiring companies. In fact, Wolseley has made 18 acquisitions worldwide in the past several months. In April, Ferguson agreed to acquire substantially all of the assets of Full Service Supply, a wholly-owned subsidiary of Kennametal, Inc. for $41 million. Full Service Supply provides integrated supply chain management and logistics to large and medium-sized metalworking plants. Ferguson has also made a few other smaller acquisitions in the past few months, including a building materials firm and plumbing distributorship.

We’re hearing talk of other acquisitions. It seems there is plenty of money for companies to expand. Stay tuned.

It’s a great to be in New England, despite the snow flurries yesterday. Today, the New England Patriots, the Super Bowl champions, are headed to the White House to be congratulated by President Bush for the third time in four years. They certainly know the turf in the Rose Garden. And Monday, the World Champion (I love to write that!) Boston Red Sox received their World Series rings at opening day ceremonies at historic Fenway Park in front of their opponents, the dreaded and evil empire New York Yankees. Oh, and by the way, the Sox trounced ’em.

Posted by Jack Keough on April 13, 2005 | Comments (1)