Genuine Parts Company has consolidated its market focus, announcing Tuesday that it has sold its office products subsidiary S.P. Richards through two separate transactions.
GPC has sold S.P. Richards' core US operations to an unnamed investor group of industry professionals, while S.P. Richards' Supply Source Enterprise business — comprised of The Safety Zone and Impact Products operations — were sold to an affiliate of private investment firm H.I.G. Capital. Both transactions were effective Tuesday.
GPC said it expects to use the net cash proceeds from the sale to enhance its cash position for capital positioning and repaying debt.
GPC had already sold the Canada unit of S.P. Richards (S.P. Richards Canada) on Jan. 1 of this year. It will move forward with automotive parts subsidiary NAPA Auto Parts and industrial products subsidiary Motion Industries (No. 4 on Industrial Distribution's 2019 Big 50 List).
Acquired by GPC in 1975, S.P. Richards is a distributor of general office products, technology products and accessories, office furniture, JanSan and safety supplies. It's key end markets include national and independent business products resellers and janitorial supply distributors. In S.P. Richards SSE business, The Safety Zone and Impact Products specialize in providing PPE and janitorial, safety and JanSan products to a customer base of JanSan supply distributors, safety products resellers, foodservice and food processing distributors and retailers.
S.P. Richards operates through a network of 44 US locations, distributing more than 98,000 products to 9,000 resellers and distributors.
"The sale of S.P. Richards represents the further streamlining of our operations and a significant step forward in our long-term strategy to optimize our portfolio," said Paul Donahue, GPC chairman and CEO. "With this divestiture, we will continue to opportunistically expand our global footprint and strengthen our focus on sustainable, value-driving initiatives associated with our faster growing and higher margin automotive and industrial businesses."
GPC will report its 2020 second quarter financial results on July 30.
"On behalf of the GPC Board and management team, I want to thank Rick Toppin and the S.P. Richards team, whose hard work and dedication has made these transactions possible." Donahue added. "Both the investor group and H.I.G. are supported by talented and experienced teams, and we are confident they are the right partners to lead these respective operations into the future. We look forward to working closely with them to support a smooth transition for our employees, customers and supply base, particularly during the ongoing challenges presented by COVID-19."
In April of 2018, GPC and workplace essentials distributor Essendant announced they had agreed to have Essendant merge with S.P. Richards. But that deal never completed, as Staples made a superior purchase offer five months later for a price of $996 million. Staples officially acquired Essendant in January 2019.
The divestment means that GPC has shed two of the four business units it had at the start of 2018. In March of 2018, GPC's electrical products subsidiary, EIS Inc. (No. 22 on ID's 2017 Big 50 List) was merged with Motion Industries before being sold off in October 2019.