Given the sentiment shared by major industrial distributors and suppliers during April through June — amid the worst of COVID-19's business impacts — it seemed the industrial supply sector was in for a severely crippled year in regards to activity in mergers & acquisitions. In their first and second quarter earnings reports, many such companies said or alluded that they would significantly curtail capital spending and put a freeze on M&A activity until market conditions became less volatile. Likewise, ID only tracked a handful of M&A announcements in this sector during April and May. However, things began to pick up somewhat in June and July and then further in August, which had far larger deals announced than in the previous few months.
August was bookended with Motion Industries announcing a pair of bolt-ons to begin the month and capped by multi-billion-dollar deals involving Builders FirstSource and Epicor. In-between, HD Supply announced a nearly $3 billion divestment, and other notable deals were abound in the industrial products sector.
Nevertheless, given the COVID-19 pandemic's lasting impacts on the US and world economy, coupled with a presidential election just two months away, it's likely that M&A activity will remain subdued through the remainder of the year. But August was certainly better than what we at ID expected as far as the amount and size of activity, so perhaps we'll see a decent amount of excitement down the stretch of 2020 after all.
Below, see what we covered in August, in chronological order of their announcement:
- Motion Industries Makes Pair of Acquisitions - announced Aug. 3
- Mallory Stays on Acquisition Trail, Adds Wise Safety - announced Aug. 5
- Harrington Plastics Acquires Aetna Plastics, Opens Fort Wayne DC - announced July 23 and July 24
- HD Supply Selling White Cap Business to CDR for $2.9 Billion - announced Aug. 11
- C.H. Hanson Acquires Cleveland's Superior Tool - announced Aug. 12
- Electrical Distributor Shaedler Yesco Acquires Locations from Rexel USA - announced Aug. 17
- FATHOM Acquires Metal 3D Printing Supplier GPI - announced Aug. 20
- Europe's Bunzl Acquires PPE Distributor in US, Packaging Distributor in Ireland - announced Aug. 24
- TricorBraun to Acquire Price Container and Packaging - announced Aug. 27
- Builders FirstSource to Buy BMC Stock Holdings for $2.5B - announced Aug. 27
- Not Resting, CD&R Will Acquire Epicor for $4.7 Billion - announced Aug. 31
When industrial supply merger & acquisition activity picked up in May following a paltry April, it seemed the sector was poised to return to near its pre-pandemic level. But the past two months have shown that not to be the case, as ID tracked 10 such deal announcements in June and only eight in July. That's still considerably better than April, but the lasting pandemic continues to curtail distributor and supplier capital spending and likely is postponing many planned deals. It appears this will continue for several months yet.
Many publicly-traded industrial distributors and suppliers stated their intention to substantially decrease capital expenditures and M&A activity as a means of cost-savings during ongoing impacts from COVID-19, so it's likely that the rate of M&A activity in this sector will remain considerably lower than usual through the rest of the year.
Despite our best efforts, there’s always deals announced that either wasn’t on our radar, or that weren’t made public. But, this list should provide a good idea of most M&A activity applicable to the industrial supply market.
If your company has M&A news to share, contact ID editor Mike Hockett at [email protected].