A pair of leading Houston distributors plans to merge in a deal worth approximately $1.5 billion, the companies announced Thursday.
DNOW intends to acquire MRC Global in an all-stock transaction combining two top distributors of pipe, valves and fittings and other supplies to the industrial and energy sectors. DNOW ranked at no. 14 on ID’s most recent Big 50 list; MRC came in at no. 10.
“MRC Global’s differentiated product offerings and complementary assets strengthen DNOW’s 160-year legacy as a worldwide supplier of energy and industrial products and packaged, engineered process and production equipment,” DNOW President and CEO David Cherechinsky said in the announcement. “We look forward to welcoming the MRC Global family to DNOW and bringing our organizations together to drive enhanced growth and value for our customers, partners and shareholders.”
The combined company would comprise more than 350 service and distribution centers and a global workforce of about 5,000 across 20 countries. The merger would expand its footprint and distribution capabilities in North America and in “attractive” international markets, officials said, while offering greater scale across the value chain. The companies also expect to achieve cost synergies of $70 million within three years of closing.
“Bringing our two companies together advances our shared goal of becoming a premier choice for energy, gas utility and industrial customers seeking exceptional service and solutions for the largest and most complex industry needs,” MRC President and CEO Rob Saltiel said in the statement.
Under the deal, MRC shareholders would receive 0.9489 shares of DNOW common stock for each share of MRC, officials said. DNOW shareholders would own about 56.5% of the combined company.
Cherechinsky will be the president and CEO of the merged company. In addition, DNOW CFO Mark Johnson will continue in the same role in the newly combined business, while two of MRC’s independent board members would join the DNOW board — raising the number of directors from eight to 10. Dick Alario will continue to serve as board chairman.
The transaction is expected to close in the fourth quarter of the year, subject to approval by each company’s shareholders and clearance by regulators. It has already been unanimously approved by the boards of both DNOW and MRC.
The announcement comes after MRC posted consecutive quarterly losses and a decline in sales in it latest fiscal year. The company also announced plans to sell its Canadian operations late last year.
