News
Breaking news in Wholesale Distribution
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 …
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  ; can be found in the MDM Special Report: Distribution M & A 2007 Update. Or  ; …
Precision Industries President and COO Chris Circo says the agreed-upon acquisition by DXP Enterprises, Inc., Houston, TX,  ; 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.”
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 …
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  ; 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 …
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 …
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. …
Source: Statistics Canada
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Manufacturing shipments in Canada tumbled in June, falling  ; 1.8% to  ; $48.6  ; billion. This was the largest decrease since January and the third consecutive monthly decline.
Despite these decreases, second-quarter shipments still managed to gain  ; 0.7% compared with the first quarter of  ; 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  ; 0.1% compared with the first six months of  ; 2006.
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Using constant dollars, which take price fluctuations into account, the volume of manufacturing shipments decreased  ; 1.7% in June to  ; …
Source: Statistics Canada
Wholesale sales in Canada grew only slightly in June (+0.2%), as increased sales of other products” were largely offset by a decrease in the automotive sector. Excluding the automotive sector, sales grew  ; 0.6%.
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Wholesale sales for the second quarter were down for the first time in nearly four years. This contraction was largely attributable to the automotive sector.
In June, increases were observed in the “other products” sector (+2.8%), the machinery and electronic equipment sector (+1.0%) and the farm products sector (+6.0%). These advances, however, were partially offset by contractions in the automotive sector (-1.6%) and the personal and household goods sector (-0.8%).
In constant prices, …
Celanese Corporation, Dallas, TX, a hybrid chemical company, has sold the Films business of its AT Plastics subsidiary to British Polythene Industries plc. The Films business manufactures products for the agricultural, horticultural and construction industries.
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The sale is part of Celanese’s plan to divest non-core businesses.
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The Specialty Polymers business of AT Plastics, whose production and support facilities are located in Edmonton, remains with Celanese. The Polymers business concentrates on the development and supply of specialty resins and …
DXP Enterprises, Inc., Houston, TX, 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 million.   ; DXP’s sales in 2006 were $279.8 million. Its sales this year will approach $340 million, based on first-half results.
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Precision is a family-owned national industrial distributor with  ; about 45%  ; of its business in integrated supply, according to Precision’s spokesperson. It has 160 locations. Precision has made at least five acquisitions since 2001, according to its Web site, and has greatly expanded its network nationwide in the past five years.
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Precision sells abrasives & cutting tools, bearings, …
