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MSC Industrial to buy Barnes Distribution

MSC Industrial Direct Co. Inc., Melville, NY, a distributor of metalworking and maintenance, repair and operations supplies has signed a definitive agreement to acquire substantially all of the assets and assume certain liabilities of the North American distribution business of the Barnes Group Inc. With this acquisition, MSC adds a complementary provider of fasteners and other high margin consumable products and services (often referred to as Class C items) with a field sales force and vendor managed inventory solution.

The purchase price will be $550 million and the asset purchase structure results in significant future tax benefits with a net present value estimated to be more than $100 million.

Headquartered in Cleveland, Ohio, BDNA is a leading distributor of fasteners and other high margin, low cost consumables with a broad distribution footprint throughout the U.S. and Canada.  BDNA has a strong presence with customers across manufacturing, government, transportation and natural resources end-markets. The business services roughly 31,000 customers with nearly 1,400 associates, including over 800 field sales associates, and offers more than 55,000 SKU’s of products. BDNA had unaudited sales of roughly $300 million for calendar year 2012.

Erik Gershwind, CEO and President, stated, “I look forward to welcoming BDNA into the MSC family. BDNA is a high quality business with a first rate team, a compelling product offering, strong customer value proposition and a broad geographic foot print including Canada. This acquisition furthers our strategy to build adjacent product expertise and deepens our connection to customers with in-plant solutions, thereby improving customer retention. We will sell MSC’s product offering through BDNA’s sales force and sell BDNA’s products and inventory management solution to MSC’s customers. BDNA checks all of the boxes strategically, and provides strong near-term accretion.”

Jeff Kaczka, Executive Vice President and CFO, commented, “Today is an exciting day and this transaction is a tremendous opportunity for MSC. We are getting a well-run, high-margin business with a strong value proposition at a good price, particularly after factoring in the significant cash tax benefits and significant cost synergies. On top of that, we are getting a new platform that provides several growth avenues for the Company. All together, that results in a highly accretive transaction by fiscal 2015.”

Mr. Gershwind concluded, “We are very excited to have the BDNA associates join the MSC team, nearly doubling our existing sales force and helping us to take this logical next step in our revenue roadmap. This transaction, along with our expected long-term organic growth, will help us to achieve our goal of $4 billion in revenues by 2016.”

Posted Feb. 24, 2013

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