2007 - Page 18 of 47 - Modern Distribution Management

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2007

HD Supply – Deal or Yes Deal!

Companies, Economic Trends, Free, Research & Analytics, Subscriber Only /

The weeks leading up to closing the deal on HD Supply has all the stuff for some kind of bizarre reality TV show that would even trump the Donald. The 18-percent reduction in the final price tag for HD Supply raises potential flags for distributors on a number of levels. Let’s explore a few.
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All three panelists at our Distribution M & A audio conference in May agreed that the M & A market was even hotter in 2007 than the year before, but that we might be nearing the end of a strong ride. Did the bell just ring? That large a discount reflects a combination of factors; the easy ones are the downturn in residential construction and the credit crunch. There were a number of internal factors that we won’t know …

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New Deal: Home Depot Sells HD Supply for $8.5B

Building Materials/Construction, Companies, Finance, Free, Mergers & Acquisitions, News, Subscriber Only, Top Distributor Sectors /

The Home Depot, Atlanta, GA, officially announced a change in terms for its sale of HD Supply, its $12 billion wholesale unit. The retailer will sell the unit to a trio of private equity firms for $8.5 billion, nearly $2 billion from the original agreement of $10.3 billion.
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In addition, Home Depot will purchase a 12.5% interest in HD Supply for $325 million and will guarantee a $1 billion loan to the buyers.
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Merrill Lynch, JP Morgan and Lehman Brothers have revised their debt commitment for 100% of the third-party debt financing.
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The deal will close Aug. 30, 2007.
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Home Depot expects to net $7.9 billion in cash proceeds from the sale.
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Despite the softness in the financing and residential construction markets, the …

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New Deal: Home Depot Sells HD Supply for $8.5B Read More »

Graybar Sales Up 5.1% in First Half

Companies, Electrical, Free, News, Subscriber Only, Top Distributor Sectors /

Graybar, St. Louis, MO, distributor of electrical and communications products and related supply chain management and logistics services, reported $2.56 billion in sales for the first six months of 2007, an increase of 5.1% over the same period in 2006.&nbsp ; &nbsp ;

Sales improved along with moderate growth in the electrical and communications/data markets. In comparison to the first half of 2006, profit rose 37.4% during the first six months of 2007 to $39.7 …

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Lincoln Industrial Acquires Indian Firm

Finance, Free, Mergers & Acquisitions, News, Subscriber Only, Top Distributor Sectors /

Lincoln Industrial, a Harbour Group company, has acquired Lincoln Helios Ltd., Bangalore, India.
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LHI designs and manufactures automatic lubrication systems, ink delivery equipment and related services to clients throughout India. The company serves a variety of industries with demanding operating environments, including wind energy, steel production, mining and printing.
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Lincoln Industrial, along with its sister companies, Alemite and Reelcraft, designs and manufactures a broad range of automated lubrication systems, dispensing equipment for high viscosity materials, hose cord, and cable reels, and related products for a variety of industrial, commercial, and consumer applications. Based in St. Louis, the company serves its global customer base from 10 …

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Reports: Home Depot Agrees to $8.5B Price Tag

Building Materials/Construction, Companies, Finance, Free, Mergers & Acquisitions, News, Subscriber Only, Top Distributor Sectors /

According to news reports, Home Depot Inc., Atlanta, GA, has agreed to sell HD Supply for $8.5 billion, roughly $2 billion less than the originally agreed-upon price.
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Private equity firms Bain Capital LLC, Carlyle Group and Clayton, Dubilier & Rice will buy the $12 billion wholesale unit after negotiating a lower price. The negotiations were blamed on tighter credit conditions.
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News reports say Home Depot will finance $1 billion of the purchase and will hold a 13% stake in the unit.
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Home Depot has not yet made an official …

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Private Label: A Balancing Act

Management, Research & Analytics, Strategy, Subscriber Only /

The co-author of a new book on private label spoke with MDM recently about how wholesaler-distributors and manufacturers can learn from trends in consumer packaged goods markets.
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On either the distributor or the manufacturer side, there is no magic bullet” for dealing with the emergence of private-label products, says Nirmalya Kumar, co-author of a new book on the subject, Private Label Strategy: How to Meet the Store Brand Challenge (Harvard Business School Press).

For a distributor, private label requires a difficult balancing act between the needs of customers and those of branded suppliers. For the manufacturer, the emergence of private label in a category requires a strong brand strategy at the end-user without alienating the distributors it …

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Private Label Carries Legal Risks

Legal Issues in Wholesale Distribution, Management, Operations, Research & Analytics, Strategy, Subscriber Only /

As the trend of private label among distributors grows, it's important to recognize the legal risks associated with this strategy. If products are sourced from overseas, as many are, wholesalers may end up carrying the ultimate blame or responsibility in a number of situations.

The information provided here is from a National Association of Wholesaler-Distributors legal brief. The brief can be found at NAW's Web site, www.naw.org.

Product Liability
In the U.S., any seller of a private-label or manufacturer-branded product is liable for losses, injury or damage caused by the defective product under strict tort liability.

Normally, a wholesaler-distributor in a U.S. suit will bring the manufacturer of a defective product into the case …

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Precision President on the Decision to Sell

Companies, Finance, Mergers & Acquisitions, Power Transmission/Motion Control/Fluid Power, Subscriber Only, Top Distributor Sectors /

Precision Industries President and COO Chris Circo says the agreed-upon acquisition by DXP Enterprises, Inc., Houston, TX,&nbsp ; was for strategic reasons, and that Precision and its management would continue as usual for the foreseeable future. The deal was not made as an exit strategy for the family.
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We’re still young and we want to keep working as long as we are having fun,” Circo says. “This is the business that we want to be in and the business that we grew up in. We think we can continue to do a lot of good for the combined organizations.
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DXP Enterprises will acquire Precision Industries, Inc., Omaha, NE, for approximately $106 million. The deal nearly doubles the size of DXP.
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Precision has annualized 2007 sales of approximately $250 …

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Precision President on the Decision to Sell Read More »

MAPI: Export Growth Should Balance Out Weaknesses in U.S. Economy

Economic Trends, Free, Research & Analytics, Subscriber Only /

In the face of continuing weakness in the housing sector, growth in the U.S. economy is expected to be slower than previously anticipated, according to a new Manufacturers Alliance/MAPI quarterly report.

The Manufacturers Alliance/MAPI Quarterly Economic Forecast forecasts that inflation-adjusted GDP growth, 3.3 percent in 2006, will slow to 1.9 percent in 2007 before regaining some strength, rising to 2.5 percent in 2008.

The housing downturn will likely be more severe, more widespread, and last longer than most analysts expected,” said Daniel J. Meckstroth, Manufacturers Alliance/MAPI Chief Economist. “… Manufacturing is buttressed, however, by somewhat better prospects in the trade sector. Exports are expected to perform well in relation to imports and …

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MAPI: Export Growth Should Balance Out Weaknesses in U.S. Economy Read More »

MDM Technology Case Study: Weighing the Cost of a WMS

Strategy, Subscriber Only, Technology /

This marine supplies distributor implemented a Warehouse Management System at its single warehouse, significantly cutting shipping errors and improving data collection and sales trend analysis.
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Lorenz & Jones Marine Distributors Inc., Ankeny, IA, believes in its Warehouse Management System so much that it uses it as a tool to bring in new customers.
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The distributor invites prospective customers to the 50,000-square-foot warehouse, places a Radio Frequency terminal in their hands, and lets them pick orders. The demonstration illustrates how easy it is to be directed to the right products.
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Potential customers are sometimes wary because they have had problems with suppliers that regularly shipped the wrong products or the wrong …

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Commentary: In Private Label, Look for the Sweet Spots

Free, Management, Perspective, Strategy, Subscriber Only /

Even if you don’t intend to add private label products to your product mix today, pay attention to what competitors are doing and how they position private label against your manufacturer brands.

As our lead article in this issue points out, private label really took off in consumer packaged goods when the industry consolidated. As retailers created national footprints, they gained the scale to effectively build out private label programs.
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And it certainly requires a certain amount of scale to support the investment into private label – to source, develop and market effectively while not damaging your current lines.
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In distribution channels, it’s important to note that it’s not just the national chains that are building private label brands. …

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MDM August 25, 2007

Subscriber Only /

This is the pdf of this issue of Modern Distribution Management. Apply the full $24.95 pay-per-view cost toward an annual subscription (within 30 days of purchase), which includes two issues a month plus access to more than six years of online archives and market data. Call 1-888-742-5060 or email [email protected] to …

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MDM August 25, 2007 Read More »

U.S. Market Analysis: Power Tools

Market Analysis, Research & Analytics, Subscriber Only /

The industrial product group listed here – Power Tools – represented a market in 2006&nbsp ; of $1.8 billion, according to estimates by Industrial Market Information, Minneapolis, MN.&nbsp ;

These charts show the top ten industries, by SIC code, consuming these products; and the 2006 end-user consumption of these groups sorted by the nine government market …

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U.S. Market Analysis: Power Tools Read More »

MDM News Digest 3716

Free, Subscriber Only /

DXP Enterprises, Inc., Houston, TX, will acquire Precision Industries, Inc., Omaha, NE, for approximately $106 million. The deal nearly doubles the size of DXP. Precision has annualized 2007 sales of approximately $250 million. &nbsp ; DXP’s sales in 2006 were $279.8 million. Its sales this year will approach $340 million, based on first-half results. More

LN Acquisition Corp., St. Louis, MO, a Harbour Group company, has acquired Reelcraft Industries, Inc., Columbia City, IN. Reelcraft is a manufacturer of spring-driven hose, cord, and cable reels for use in industrial, automotive, aerospace, military and specialty applications with facilities in the U.S., Canada, England and China. Reelcraft …

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MDM News Digest 3716 Read More »

Report: Banks Reluctant to Lend Money in HD Supply Deal

Building Materials/Construction, Companies, Finance, Free, Mergers & Acquisitions, News, Subscriber Only, Top Distributor Sectors /

According to news reports, Home Depot negotiations with a trio of private equity firms that had agreed to buy HD Supply are still in the works. The parties could lower the price by at least $1 billion, or the sale could fall through, Bloomberg reports.
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Apparently, the banks involved -Merrill Lynch & Co, JPMorgan Chase & Co. and Lehman Brothers Holdings Inc. -are reluctant to lend the money to enable the buy due to a tightening credit market.
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The deal for the $12 billion unit was scheduled to close Thursday, but no parties have announced a resolution.

More on M & A trends in distribution&nbsp ; can be found in the MDM Special Report: Distribution M & A 2007 Update. Or&nbsp ; …

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Report: Banks Reluctant to Lend Money in HD Supply Deal Read More »

Precision President: DXP Deal a Strategic Move for Family-Run Company

Companies, Finance, Free, Mergers & Acquisitions, News, Power Transmission/Motion Control/Fluid Power, Subscriber Only, Top Distributor Sectors /

Precision Industries President and COO Chris Circo says the agreed-upon acquisition by DXP Enterprises, Inc., Houston, TX,&nbsp ; was for strategic reasons, and that Precision and its management would continue as usual for the foreseeable future. The deal was not made as an exit strategy for the family.
&nbsp ;
We’re still young and we want to keep working as long as we are having fun,” Circo says. “This is the business that we want to be in and the business that we grew up in. We think we can continue to do a lot of good for the combined organizations.”

DXP Enterprises will acquire Precision Industries, Inc., Omaha, NE, for approximately $106 million. The deal nearly doubles the size of DXP.

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Precision has annualized 2007 sales of approximately …

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Precision President: DXP Deal a Strategic Move for Family-Run Company Read More »

Goodyear Engineered Products Now Veyance

Free, News, Subscriber Only /

Post-acquisition by The Carlyle Group, Goodyear Engineered Products, Akron, OH, has changed its name to Veyance Technologies Inc.
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The company will continue producing Goodyear Engineered Products brand industrial, military and automotive products.
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The company’s management team remains in place.
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In other news, the new Veyance has strengthened its North America position in the conveyor belt industry with the purchase of the former Industrial Specialty Fabrics of
Hogansville, GA. The operation has been renamed Specialty Fabrics & Converting …

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Goodyear Engineered Products Now Veyance Read More »

Report: No Agreement Yet in HD Supply Negotiation

Building Materials/Construction, Companies, Finance, Free, Mergers & Acquisitions, News, Subscriber Only, Top Distributor Sectors /

The Financial Times has reported that the buyers of HD Supply want a more than $1 billion price cut to the agreed-upon $10.3 billion purchase price. The parties recently moved the closing date for the sale by Home Depot&nbsp ; back to Thursday, Aug. 23 -tomorrow.
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The paper reported that one market investor expects the new price could be closer to $8.5 billion, a sentiment echoed earlier this month by industry analysts.
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At the original price of $10.3 billion, the buyers would have paid 10X-12X EBITDA. Tightening credit markets forced the deal-makers back to the table.
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The buyers would have to pay a $310 million break-up fee if they decide to walk away from the deal, FT said.
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Home …

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Report: No Agreement Yet in HD Supply Negotiation Read More »

Samuel, Son & Co. Expands to UK

Free, Metals Service Centers, News, Subscriber Only, Top Distributor Sectors /

Metals distributor Samuel, Son & Co. Ltd., Mississauga, Ontario, Canada, has signed a joint venture agreement with Generation Metals International Ltd., Reading, England.
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The new company, Samuel, Son & Co. (UK) Ltd., expands the Canadian distributor to the UK. In a release, the company said: This partnership will enhance our commitment to Eclipse Aviation Corporation as the metal service provider for raw materials outside of the U.S.”
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The new company will open a 23,000-square-foot facility north of Birmingham focused on processing a range of aerospace raw material metallic commodities with attention to aerospace aluminum plate products.
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Samuel, Son & Co. has 110 branches strategically located throughout North America. …

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2Q Shipments in Canada Up 0.7%

Economic Trends, Free, News, Research & Analytics, Subscriber Only /

Source: Statistics Canada
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Manufacturing shipments in Canada tumbled in June, falling&nbsp ; 1.8% to&nbsp ; $48.6&nbsp ; billion. This was the largest decrease since January and the third consecutive monthly decline.

Despite these decreases, second-quarter shipments still managed to gain&nbsp ; 0.7% compared with the first quarter of&nbsp ; 2007. This was due to high shipment levels at the start of the second quarter after a particularly strong March. Examining the first six months of this year, manufacturing shipments were up&nbsp ; 0.1% compared with the first six months of&nbsp ; 2006.
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Using constant dollars, which take price fluctuations into account, the volume of manufacturing shipments decreased&nbsp ; 1.7% in June to&nbsp ; …

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2Q Shipments in Canada Up 0.7% Read More »

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