Motion Industries' capabilities and geographic reach has received a major boost, as its parent company — Genuine Parts Company (GPC) — announced March 30 it has invested a 35 percent stake in Sydney, Australia-based Inenco for approximately $70 million. GPC can acquire the remaining 65 percent of Inenco at a later date if certain conditions are met.
With annual sales of about US$325 million, a headcount of about 1,300 and more than 160 branches, Inenco is a large industrial distributor that services Australia and New Zealand and has been extending its footprint into Southeast Asia. Founded in 1954, Inenco's core product lines include a range of power transmission/motion control (PT/MC) products, bearings, fasteners, sealant, lifting and safety equipment, MRO and engineering services.
It’s the latest move by GPC to enhance its Industrial Segment, which included 5 recent acquisitions by Motion Industries — No. 8 on Industrial Distribution’s Big 50 List — in 2016, which were all domestic additions. With Inenco, GPC and Motion Industries greatly enhance their presence halfway around the world.
ID recently spoke with Motion Industries President & CEO Tim Breen on how the investment came about, and to his thoughts on the Australasia market for industrial products. Breen said that Motion’s relationship with the Inenco Group goes back quite a few years.
“We always kept a good line of peer communication with them about what’s going on in the global market,” Breen said. “The family (Inenco) had decided they wanted to divest at some point. It was a relationship we had over the years that allowed them to see the culture that GPC and Motion Industries had that led to them making this deal.”
Though GPC’s investment in Inenco — effective April 3 — is currently only 35 percent, Breen alluded that it’s very likely the company will acquire the remaining 65 percent down the road.
“There’s no reason to enter into one of these things if you don’t think you’re going to close the entire deal,” Breen said. “I think that’s the expectation on both sides. They (GPC) wouldn’t have taken the time to invest in this company if they didn’t have every intention of acquiring it completely.”
GPC’s first quarter earnings report — shared April 19 — showed that Motion Industries’ Q1 sales improved 6.9 percent year-over-year and operating profit jumped 10.4 percent.
Breen said Motion Industries and Inenco are very complementary companies and that the investment agreement provides numerous synergies in the industrial MRO category as well as other synergies with GPC – Asia Pac, the Company’s automotive operations in Australasia. He praised Inenco as the premier PT/MC distributor in Australia and New Zealand, with it owning the top two brands in the market there.
“I don’t want to speak for Inenco, but this allows it to have the backing of a $15 billion organization (GPC) with the ability to invest,” Breen said.
Beyond that, Inenco is an opportunity for GPC and Motion Industries to enhance its international capabilities and reputation. Inenco’s already strong network in Australia and New Zealand is complemented by an increasing presence in Singapore and southeast Asia. Equally as important, the investment will allow both Inenco and Motion Industries to further build relationships with suppliers that have international interest.
“It’s certainly something we’ve always wanted to do,” Breen said. “And if you do it, you want to do it with the No. 1 or 2 player in the marketplace. GPC did that. Many of our suppliers ask if we’re going to be a global partner someday, and this answers the industrial side of it. Half our business is tied up in very large contractual customers that span the globe. They had always hoped we could provide a similar experience globally that we provide in North America. This gives us an opportunity down the road to do that.”
GPC’s 2016 acquisitions aimed to boost Motion Industries included Missouri Power Transmission, Colmar Belting Company, Epperson and Company, OBBCO Safety & Supply, and Braas Company. Motion Industries — which provides its customers access to more than 6.9 million SKUs of inventory — comprised approximately 30 percent of GPC’s total sales in 2016. Motion Industries has 483 branches, 43 service centers and 13 distribution centers throughout North America, serving more than 300,000 MRO and OEM customers.
“It’s an exciting time,” Breen said. “It’s a good market and an area we think still has a lot of growth ahead. Inenco is a great group of folks, and we’re looking forward to working with them.”