Pace of M&A Cools Slightly, But Expect Big Things Ahead

February and March may be behind the breakneck M&A pace of the previous five months, but activity should remain robust going forward.

I Stock 1347295696

We knew the onslaught of merger and acquisition announcements that flooded Q4 2021 and the start of 2022 wasn’t sustainable.

Industrial Distribution posted at least 27 M&A news announcements in five of the six months from September 2021 to February 2022, including 33 in September, 38 in December and 41 in January. Each of those three months set a new single-month M&A items record for my now 6.5-year tenure with this publication.

Mike Hockett Managing EditorMike Hockett
Managing Editor
For perspective, I’ve always considered a month with 15-16 M&A news items to be a pretty average month in this market, which would equate to news of a deal every other day. That was blown out of the water since the start of last fall, but appears to be coming back to earth.

During February we covered 17 M&A items — woeful by recent months standards — but by no means bad compared to recent years. March was pacing well ahead as of this blog post, with ID posting 25 such news items through March 24.

We may not be quite at the breakneck pace of those previous months, but I fully expect industrial supply M&A activity to remain very healthy during the rest of 2022 and well into 2023. 

The general vibe and chatter I’m getting from the industry is that this market is primed for good times for at least the next two to three years. This was especially evident during my time spent at the NAW Executive Summit in late January and Grainger Show Feb. 27-March 1. My conversations at those events with executives from distributors and suppliers alike often touched on how they are expecting considerable industrial capital project activity coming out of the (hopefully) tail-end of the COVID-19 pandemic and the resumption of factory capacity expansions.

Coupled with federal projects coming out of the $1.2 trillion infrastructure bill signed this past November and a rosy outlook for construction spending, this means the iron is hot for industrial M&A, and I expect that distributors, suppliers and private investment firms are striking it now.

Biggest February-March Deals

While every deal pertaining to the industrial supply sector is worth noting, I’ll highlight a handful of the most prominent ones announced between mid-February and mid-March:

Stellar Industrial acquires MRO distributor Timesaver in Phoenix - announced March 14: Founded in 1978, Timesaver Industrial is Stellar's second acquisition already this year and ninth in the past 15 years. It gives Stellar 13 regional branches.

Two more water/wastewater acquisitions for DXP Enterprises - March 2: The Houston-based MROP distributor and service provider’s latest acquisitions in the water/wastewater management vertical are in the form of Drydon Equipment, Inc. (Elgin, IL) and Burlingame Engineers (Concord, CA). With a combined $8.9 million in 2021 sales, they are the seventh and eighth acquisitions that market for DXP (No. 17 on Big 50) since December 2020.

Vallen, Sonepar's industrial distribution subsidiary, is going private - Feb. 24: Private equity firm Nautic Partners has inked a deal to acquire MROP distributor Vallen Distribution (No. 12 on Big 50), the lone industrial products brand of electrical products distribution giant Sonepar. With roots dating back to 1865, Belmont, NC-based Vallen was formerly known as Hagemeyer North America-Industrial Distribution Group until it rebranded in 2016. 

Cummins to buy powertrain supplier Meritor for $3.7B - Feb. 22: Meritor is a key supplier of drivetrain, mobility, braking, aftermarket and electric powertrain solutions for commercial vehicle and industrial markets.

DuPont selling most of Mobility & Materials segment to Celanese for $11B - Feb. 18: It involves DuPont divesting a majority of that segment, including the Engineering Polymers business line and select lines within the Performance Resins and Advanced Solutions business lines, for $11.0 billion in cash. Combined, these businesses had 2021 net sales of approximately $3.5 billion.

As always, the best way to stay on top of all M&A news relevant to the industrial supply market is to frequent www.inddist.com and subscribe to our free daily e-newsletter.

Latest in Mergers & Acquisitions
More in Mergers & Acquisitions