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2008

WESCO: Bid for IDG Was a `Full and Fair Valuation’

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

In WESCO’s recent conference call on its first-quarter earnings, CFO Stephen Van Oss addressed the distributor’s ultimately withdrawn bid for Industrial Distribution Group in April:

(IDG) strategically fit our business well and they have done a good job on those types of programs with smaller customers, where WESCO’s programs tend to be with much larger engagements. … Additionally, they had a number of specialty businesses, some of which lined up nicely with WESCO’s strength, such as the manufactured housing area, where we could leverage our infrastructure nicely and bring in some new products sets to get better penetration.”

Van Oss said that WESCO felt it had a “full and fair valuation”with its $11.75 bid ($0.05 less than Platinum Equity’s bid) and the …

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MDM News Digest 3809

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Atlanta, GA-based Industrial Distribution Group, Inc., will move forward with a plan to be acquired by Luther King Capital Management, accepting the private equity firm’s $12.10 per share offer -close to $136 million. Platinum Equity notified IDG that it will not match or beat LKCM’s bid. LKCM said it would reimburse IDG for the 3 percent break-up fee required when IDG breaks the Platinum merger agreement. More
HD Supply White Cap, Costa Mesa, CA, distributor of specialty hardware, tools and materials for large and medium-sized contractors, has entered the Minneapolis-St. Paul market with the opening of a 6,000-square-foot warehouse.  More
The Home …

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New MDM Webcast: Distribution M&A 2008 Update – Value Redefined in a Tough Market

Economic Trends, Research & Analytics, Subscriber Only /

Debt markets turned upside down, valuations dropped, and deals have slowed. What a difference a year makes! Strategic buyers have resurfaced as private equity’s hands have been tied in a very different landscape than 12 months ago. There are new drivers and definitions of value in 2008, but there are also good opportunities for distributors to capitalize in the new environment -on the buy and sell sides.

What’s the impact for your company? Join MDM on May 22 as three seasoned M&A experts share their insight on the 2008 distribution M&A market. In this two-hour Webcast, you’ll hear practical tips from professionals with deep experience helping distribution executives navigate deals across a range of company sizes, sectors and ownership structures.

Our three panelists …

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MDM May 10, 2008

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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 info@mdm.com to …

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PT/MC Sales Drop 7.6% in March

Economic Trends, Free, News, Power Transmission/Motion Control/Fluid Power, Research & Analytics, Subscriber Only, Top Distributor Sectors /

The Power Transmission Distributors Association (PTDA) today released the March 2008 month-end trend data for distributors and manufacturers of power transmission/motion control (PT/MC) products. All categories posted a decline in sales for the first time in 2008.
 
U.S. distributors’sales of PT/MC products dropped 7.6% in March 2008 compared to February 2008.  When matched up against sales in the same month last year, sales in March 2008 gained 1.1%. Accounts receivable collection days experienced its first increase in 2008, up 7.7% from February 2008. The confidence index of U.S. distributors remained flat for the fourth month in a row at 5.8 (on a 10-point scale).
 
Canadian distributors also reported a drop in PT/MC sales, falling 7.9% in March 2008. Sales …

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3M to Divest HighJump Software

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

3M, St. Paul, MN, has agreed to sell HighJump Software, a 3M company, to Battery Ventures, a technology venture capital and private equity firm. The transaction will result in a stand-alone company focused on providing supply chain solutions to a global customer base.
 
At Battery Ventures we are looking to acquire technology-based businesses in attractive markets that, through innovation and a strong product development history, have established market leadership,”said Dave Tabors, general partner, Battery Ventures.
 
Eden Prairie, MN-based HighJump Software employs 350 people globally.
 
With $24 billion in sales, diversified manufacturer 3M employs 75,000 people worldwide and has operations in more than 60 …

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Beacon Roofing Supply Records Net Loss in First Half

Building Materials/Construction, Companies, Free, News, Subscriber Only, Top Distributor Sectors /

Roofing supplies distributor Beacon Roofing Supply, Inc., Peabody, MA, reported sales in its first half were up 5.3% to $702.6 million from the same period a year ago. Growth was due to acquisitions. Sales in existing markets fell 9.8%.
 
Beacon recorded a net loss for the first half of $2.9 million, compared with profit of $2.5 million in 2007.
 
Robert Buck, CEO, said: Our second quarter sales and profits remained below our goals and we certainly are disappointed with the first half net loss. However, gross margins in our existing markets appear to be stabilizing and we are seeing additional benefits from our cost containment measures.
 
“We continuously evaluate the performance and projections of every one of our branches and regions as we look to …

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3M Agrees to Buy Quest Technologies

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

3M, St. Paul, MN, has agreed to buy Quest Technologies Inc., a manufacturer of environmental monitoring equipment, including noise, heat stress and vibration monitors.
 
The move boosts 3M’s offering in safety products. Quest Technologies broadens our presence in the industrial hygiene and safety equipment markets by bringing its renowned sound monitoring technology to our strong offering of personal protective equipment,”said Julie Bushman, vice president and general manager, 3M Occupational Health and Environmental Safety Division.
 
Quest, an employee-owned company, employs 95 people at its headquarters in Oconomowoc, …

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Womack Machine Supply Buys Applied International Motion

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

Womack Machine Supply Company has acquired California-based Applied International Motion LLC.
 
This purchase continues Double Rocker’s (Womack’s parent company) diversification into new products and markets,” said Mike Rowlett, Womack’s CEO.
 
The addition of Applied International Motion allows Womack Machine Supply to sell and service Factory Automation products and Motion Control systems in California and Nevada. Industries which they serve include semiconductor, medical, defense, packaging, machine tools and general automation for a broad range of manufacturing.
 
Womack Machine Supply is an industrial distributor of Hydraulic, Pneumatic and Automation Equipment with corporate offices located in Farmers Branch, TX. Womack represents manufacturers of …

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March Wholesale Revenues Up 1.6% from February

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The February preliminary estimate was revised upward $0.9 billion or 0.2 percent.
 
March sales of durable goods were up 2.3 percent from last month and were up 4.8 percent from a year ago. Compared to last month, motor vehicle and motor vehicle parts and supplies were up 4.5 percent and sales of metals and minerals, except petroleum, were up 3.5 percent. Sales of nondurable goods were up 1.0 percent from last month and were up 20.1 percent from last year.
 
Sales of farm product raw materials were up 9.4 percent from last month and sales of beer, wine, and distilled alcoholic beverages were up 2.7 percent.
 
Inventories. Total inventories of merchant wholesalers, except manufacturers’sales branches and offices, after adjustment for seasonal …

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Colfax Corp. Now Trading On NYSE

Free, News, Power Transmission/Motion Control/Fluid Power, Subscriber Only, Top Distributor Sectors /

Colfax Corp., Richmond, VA, manufacturer in fluid-handling solutions, announced that its common stock has begun trading on the New York Stock Exchange under the ticker symbol CFX”following its initial public offering.
 
“The Colfax associates have worked hard to build a company that sets the standard in critical fluid-handling solutions around the world,”said John A. Young, president and CEO of Colfax. “I am proud of the accomplishments that have led us to this historic day in Colfax’s 12-year history. It is an honor to be a NYSE-traded company.”
 
Colfax Corp. manufactures positive displacement industrial pumps and valves used in global oil &gas, power generation, marine, naval and a variety of other industrial applications. Key product brands include, Allweiler, …

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Illinois Tool Works to Buy Enodis for $2.3B

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

Illinois Tool Works Inc., Glenview, IL, has agreed to buy commercial foodservice equipment supplier Enodis for $2.1 billion in cash plus the assumption of debt, bringing the market value to $2.3 billion.
 
Enodis had reported revenues of $1.6 billion for fiscal year ended Sept. 30, 2007. The company’s product line includes food equipment mainly for fast food restaurants, institutions and supermarket/grocery stores. Major products include cooking equipment, ice and beverage dispensing equipment, and stand-alone refrigeration as well as refrigerated display cases. Enodis’ brand names include Frymaster, Garland, Lincoln, Scotsman, Convotherm and Kysor Warren.
 
ITW’s existing food equipment businesses had revenues of $1.9 billion in 2007 and feature products primarily …

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Haydon Enterprises Buys Kerk Motion Products

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

Waterbury, CT-based Haydon Enterprises, a Harbour Group company, has acquired Kerk Motion Products, Inc.
 
Kerk, Hollis, NH, designs and manufactures a line of high-precision motion control products that include lead-screw assemblies, slides, linear rails, and actuators.
 
Haydon is a designer and manufacturer of fractional horsepower linear actuators, lead screw assemblies, rotary stepper motors and hermetically sealed switches for niche- market applications. The company, founded in 1951, operates 11 facilities on three continents.
 
Haydon is part of Harbour Group, a privately owned company based in St. Louis, MO. Harbour Group and its operating companies are engaged in the manufacture and distribution of a wide variety of consumer and industrial …

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Sonepar’s Plans for Hagemeyer

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

Sonepar USA plans to approach the integration of Hagemeyer’s U.S. assets much like it does any other company it acquires, CEO Tony Burr tells MDM in a recent interview. It has a different customer base, predominantly, and a different market approach,” he says. Sonepar has not yet acquired Dutch electrical distributor Hagemeyer’s assets in North America, Asia-Pacific and select European markets from Paris-based Rexel, but the plan is to do so before the end of the year.
 
Sonepar’s strategy is to leave acquired companies’ trading names and management in place; with this operating structure, the distributor recognizes that distribution is largely a local business and that it is important to cater to local needs.
 
In Hagemeyer’s case, “We’ll find there will be some …

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Night & Day for M&A

Finance, Free, Mergers & Acquisitions, News, Subscriber Only /

I recently spoke with the three panelists who will be on the third annual MDM Distribution M&A 2008 Update call on May 22 -Brent Grover, Jim Miller and Jon Skelly. They all described how radically things have changed in less than 12 months in merger and acquisition activity in distribution. Here are a few quick takeaways from that call.
 
A year ago, financial buyers were driving the market with still-high EBITDA multiples and a lot of deal activity. Activity and pricing have dropped significantly in 2008. Debt markets have tightened, and private equity has its hands tied with very different capital structures. Strategic buyers could not compete a year ago with the multiples; this year they are competitive …

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Manufacturing Growth to Be ‘Marginal’ in 2008

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

Economic growth in the U.S. is sustainable throughout the remainder of 2008, say the nation’s purchasing and supply executives in their spring 2008 Semiannual Economic Forecast. These projections are part of the forecast issued by the Business Survey Committee of the Institute for Supply Management.
 
Overview
Manufacturing Growth Marginal in 2008
Revenue to Increase 1%
Capital Investment to Increase 1%
Capacity Utilization at 78.6%
Non-Manufacturing Growth Sustainable in 2008
Revenue to Increase 2.7%
Capital Investment to Decrease 2.7%
Capacity Utilization at 85.9%
 
Manufacturing Summary
While 42 percent of respondents predict revenues to be 9.2 percent greater in 2008 than in 2007, the overall expected …

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Emerson Organic Growth at 6% in 2Q

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

Emerson, St. Louis, MO, reported sales for the second quarter ended March 31, 2008 of $6 billion, an increase of 12%. Underlying sales increased 6% in the quarter, which excludes the impact of favorable foreign currency exchange rates (4%) and impact from acquisitions, net of divestitures (2%).
 
Strong international results led the growth, where sales increased by 10% on an underlying basis. Regional underlying sales growth included increases of 18% in both Asia and Latin America and 19% in Middle East/Africa. Underlying sales in the U.S. softened and were up 1%.
 
Process Management underlying sales grew 16%, led by strength in global energy sectors and continued project wins in a range of industries. Reported sales included a favorable 5% impact from …

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Milacron Sales Up in 1Q

Free, News, Power Transmission/Motion Control/Fluid Power, Subscriber Only, Top Distributor Sectors /

Milacron Inc., Cincinnati, OH, supplier of plastics-processing technologies and industrial fluids, reported a net loss of $6.9 million in the first quarter ended March 31.
 
Sales in the quarter were $203 million, up from $190 million. The increase was due almost entirely to favorable currency translation effects, primarily the weakening of the dollar vis-à-vis the euro and other currencies. New orders in the quarter were also $203 million, and the backlog of $134 million remained at a healthy level.
 
We continue to make solid progress in reducing our product costs as well as our overall cost structure,”said Ronald D. Brown, CEO. “The results of these efforts are showing up in improved manufacturing margins and operating earnings, despite difficult market …

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1Q Construction Spending 2.4% Below Last Year

Building Materials/Construction, Economic Trends, Free, News, Research & Analytics, Subscriber Only, Top Distributor Sectors /

Construction spending during March 2008 was estimated at a seasonally adjusted annual rate of $1,123.5 billion, 1.1% below the revised February estimate. The March figure is 3.4% below March 2007.
 
During the first three months of the year, construction spending was $241.6 billion, 2.4% below the the same period in 2007.
 
Private Construction
Spending on private construction was at a seasonally adjusted annual rate of $827.4 billion, 1.7% (±1.4%) below the revised February estimate of $842.0 billion. Residential construction was at a seasonally adjusted annual rate of $445.0 billion in March, 4.6% below the revised February estimate of $466.7 billion. Nonresidential construction was at a seasonally adjusted annual rate of $382.3 billion in …

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Airgas Fiscal 2008 Sales Grow 25% to $4B

Companies, Free, Gases & Welding Equipment, News, Subscriber Only, Top Distributor Sectors /

Airgas, Inc., distributor of industrial, medical, and specialty gases, welding, safety, and related products, reported sales in its fiscal 2008 were up 25% to $4 billion, with same-store sales growth of 7%.
 
Airgas made 18 acquisitions in fiscal 2008, adding more than $500 million in annualized revenue, including Linde’s U.S. packaged gas business, which added $346 million.
 
These transactions helped us enhance our core business and extend our product lines, with acquisitions in packaged gases and welding products, safety products, ammonia, and refrigerants,”said CEO Peter McCausland.
 
Fourth quarter sales grew 27% from the prior year to $1.1 billion, with acquisitions contributing 17% of the growth. Total same-store sales increased 8% in the quarter, …

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