Global Fastener News

1997 to 2006 – History of Questron Technology

August 28
00:00 2012

1997 FIN – Questron Taps Taylor to Acquire Distributorships

July 15, 1997 FIN – Questron Technology Inc. paid $2.25 million to buy Integrated Material Systems Inc. and retain Jim Taylor to lead its effort to grow to a $200 million fastener distribution company within five years.
Taylor, who founded IMS just this year after 25 years with Semblex Corporation, said he will continue as president of the new Scottsdale, AZ-based master distributorship and lead the fastener distributor acquisition effort.
“They want into the fastener business,” Taylor declared.
The Questron bid increases the interest and competition for consolidation among North American fastener distributors. Boca Raton, FL-based Questron describes itself as a specialized distributor of fasteners and electronic hardware.

CEO Dominic Polimeni said Questron leaders knew Taylor because Semblex is a supplier to its Quest Electronic Hardware, the one-time fastener division of Arrow Electronics.
Robert Gubitosi and Polimeni, the Questron leaders with financial backgrounds, and Taylor had several meetings this spring and “recognized lots of commonality.”
“We’re basically from outside the industry,” Polimeni volunteers of Questron’s management. “I’m not real technical-which I understand the fastener business can be. Jim will provide the technical expertise,” Polimeni told Fastener Industry News.

Taylor said Questron “made me an offer I couldn’t refuse.” It included purchasing IMS and Taylor operating the distributorship as a wholly-owned subsidiary for five years and “helping steer them in the right direction” in acquiring distributorships. “It seemed to be an offer too good to be true,” Taylor said.
Taylor described the two principal Questron executives, Polimeni and Gubitosi, as “financial guys for Arrow Electronics. Questron Technology was created to become the vehicle to purchase firms” and the first was Quest Electronic Hardware – the old fastener division of Arrow-with branches in San Jose, Colorado Springs, Dallas, Austin, Boston and Reno.
In addition to purchasing IMS, Questron has acquired Webb Distribution of Boston,
Polimeni said they became interested in the fastener business when they were approached in 1987 to sell Arrow fastener division.
“Arrow’s fastener business had muddled along,” Polimeni told FIN.
Polimeni described his view of the fastener industry as “one, a very interesting, profitable business and, two, a very fragmented industry populated by a lot of mom and pop distributors. It is an interesting opportunity for consolidating.”
“We want to grow to a $200 million company through acquisitions,” Taylor said.
Boca Raton, FL-based Questron describes itself as a specialized distributor of fasteners and electronic hardware.
Polimeni said Questron today is a $21 million to $22 million company.

Spotlight on Distributor Acquisitions
The growth in the U.S. market through acquisition of distributorships puts Questron in direct competition with the Würth Group, the German fastener firm which has closed three high profile purchases in less than two years and has a fourth pending. Würth purchased Louisville, KY-based Snider Bolt & Screw Inc.; Richmond, VA-based Rev-Car Fasteners; and Berlin, CT-based Eastern Fastener Corp. Additionally, Win Adams of Adams Nut & Bolt said he has a sale pending with Würth.

In early 1996 importer/master distributor Reynolds Fasteners Inc. was acquired by Acklands Limited of Canada.
Richard Hagen of Pinnacle Capital, which specializes in arranging sales of fastener firms, said the Questron, Würth and Acklands deals in recent years demonstrate “distributors are becoming hot now.”
Questron picking up Taylor will heat up the competition, as Questron is likely to bid for some of the same companies Würth is courting.
Taylor said one of his key points for distributors interested in selling their business is that instead of offering just a “fixed dollar price, part of it can be in stock. That stock may be worth X today but has potential to rise as Questron grows.”

Questron on Wall Street
At 5 3/8 on July 10, Questron showed a low 12.5 price/earnings ratio. The price earnings ratios for established companies listed on the New York Stock Exchange 17 to 21.
In contrast, Fastenal, the Minnesota-based chain more that 400 fastener stores, has a price/earnings ratio of 58.
However, Questron is not currently paying a dividend and Fastenal is paying 8.9%.
Questron just hired a financial public relations firm to begin telling the company story to Wall Street investors.
“We want people to wake up and take notice of us,” Polimeni.
Taylor predicted Questron “will catch a lot of interest on Wall Street. We are ready to start performing very well and we are one or two acquisitions away from becoming high profile.”
“We think we can do that,” Polimeni said of the $200 million fastener company goal. We’ve grown this business 17% a year for four years. We’re going to keep up the growth rate.”
In addition to acquisitions, higher revenues will come from finding new customers for established and newly acquired businesses.
Questron will aim to provide “the low end of high-tech products to high-tech companies,” Polimeni said. ©1997/2012 Fastener Industry News
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2001 FIN – Questron Lenders Postpone Debt Payments; Distributor Seeks Equity, Debt Restructuring or Sale

December 28, 2001 FIN – Questron Technology Inc. announced it reached agreements with senior lenders and a majority of senior note holders to defer certain payment obligations until February 14, 2002.
Questron is working with an investment banker to explore such alternatives as equity investments, restructuring debt or sale of the company or assets.
The company “has received several indications of interest concerning possible transactions,” but does not have “any definitive proposals.”
One holder of a minority of the senior subordinated notes agreed to defer payment and could declare default.
“Although there can be no assurance, the company believes it is unlikely that the minority note holder would declare such a default at this time and any such declaration would not affect the deferral otherwise granted to the company,” according to a company statement.
CEO Dominic Polimeni said he is “pleased” with the agreements with lenders and that “they remain supportive during these difficult and challenging economic times.” The agreements “afford the company additional time to evaluate the indications of interest that have been presented and to seek to enter into an investment, financing or sale transaction.” Web: ©2001/2012  Fastener Industry News

2002 FIN – Questron Files for Bankruptcy

February 4, 2002 FIN – Questron Technology Inc. announced it has filed for Chapter 11 bankruptcy and signed an agreement with QTI Acquisition Corp. providing for QTI’s acquisition of substantially all of Questron’s assets.
The asset sale is subject to customary closing conditions and bankruptcy court auction and approval.
QTI is a newly formed company owned and organized by an affiliate of Sun Capital Partners Inc.
Questron CEO Dominic Polimeni said the bankruptcy filing “protects the value of Questron’s business for the benefit of Questron’s creditors and will help ensure that our customers continue to receive uninterrupted service through the sale process and thereafter.” Polimeni told FIN that Questron has sufficient cash to finance operations, including post-petition trade and employee obligations.
Sun Capital vice president Steven Liff said, “we are excited about investing in a business that is well positioned in its industry. With our capital infusion and operational expertise, the business should have sufficient liquidity and ongoing support to take advantage of revenue growth and to continue to provide excellent service to its strong customer base.”
QTI will assume the $81.5 million in debt and leases, customer contracts and other agreements. QTI will employ all of Questron’s employees at the closing. ©2002/2012 Fastener Industry News

2002 FIN – General Electric Buys Questron in Bankruptcy Auction; No Proceeds for Stockholders

April 18, 2002 FIN – General Electric Company’s GE Supply business unit won the bankruptcy court auction to acquire Questron Technology Inc.
The $89.2 million purchase price will be insufficient to cover all of the fastener distributor’s liabilities and therefore Questron’s stockholders will not receive any money.
The U.S. Bankruptcy Court in Delaware approved the cash and deferred payments bid as the highest and best offer. Completion of the sale is subject to certain customary closing conditions and is expected to close on or about May 5, 2002.
Under the agreement GE Supply will pay $86.7 million in cash upon closing, will assume certain leases, customer contracts and other agreements and will fund up to $500,000 for administrative expenses of Questron’s bankruptcy proceedings. GE Supply will offer employment to all Questron employees and provide them with comparable benefits. GE will not assume any other Questron liabilities.
GE Supply also agreed to make certain additional payments, dependent in part upon the operating results of the acquired business up to $2 million in the aggregate, with $666,667 of this amount guaranteed.
“We view this sale as a very favorable development for Questron, its customers, suppliers and employees,” Questron CEO Dominic Polimeni told Fastener Industry News.
The proceeds of the sale will be used to pay liabilities and discharge claims in accordance with the Bankruptcy Code, including the payment of a $2.5 million fee to QTI Acquisition Corp. in order to terminate their previously announced assets sale agreement with Questron and its subsidiaries.
Questron and its subsidiaries filed for Chapter 11 bankruptcy reorganization on February 3, 2002. Questron provides supply chain management and inventory logistics management for small parts commonly referred to as “C” inventory items for OEMs. Web: ©2002/2012 Fastener Industry News

2003 FIN – GE’s Ex-Questron Unit Moved; New Leadership Team Named

February 18, 2003 FIN – GE Supply Logistics LLC opened an 82,000 sq ft headquarters, sales and distribution center in Irving, TX, president Jason Jones announced.
The new business leadership team is headed by Jones and includes Matt Grim, aerospace; Phil Schwiebert, west region; Dan Falmer, east region; Scott Tucker, sales & marketing; Andy Ray, sourcing; Vishwanathan Balasubramanian, operations; Derek Cleghorn, finance; Rany Hoff, quality; Brian Rowland, technology; and Janice Dyer, human resources.
GE Supply, the electrical, voice and data products distribution business of General Electric Company, acquired the Questron Technologies business last year. GE Supply Logistics has 400 employees and provides supply chain management and inventory logistics for “C” class commodity parts for the aerospace industry and commercial and industrial OEM users. The headquarters near the Dallas/Fort Worth International Airport is located at 9500 N. Royal Ln., #130, Irving, TX 75063. Tel: 972 915-0800 Web: ©2003/2012 Fastener Industry News.

2006 FIN – Rexel of France Acquires GE Supply, Including the Former Questron Technologies

July 11, 2006 FIN – Worldwide electrical supplies distributor Rexel Group and General Electric’s Consumer & Industrial unit announced Rexel will acquire GE Supply, GE’s electrical distribution business, for US$725 million.
The deal includes GE Supply Logistics, which GE established after acquiring fastener distributor Questron Technologies Inc. in 2002 for $88.7 million.
Rexel’s U.S. subsidiary, Dallas-based Rexel Inc., posted $2.5 billion in sales in 2005. GE Supply offers Rexel US$2.2 billion in pro forma 2005 annual revenues for the transferred business.
GE Supply distributes electrical products produced by GE and more than 200 other manufacturers. The Shelton, CT-based business employs approximately 2,500 people in more than 150 locations around the world. GE Supply’s core electrical distribution activities operate mainly in the U.S.
Rexel announced it will operate in the U.S. through a dual-banner strategy and expand product lines.
The transaction is expected to close by early August 2006, subject to consent of Rexel’s senior lenders.
Fastener division GE Supply Logistics is headquartered at an 82,000 sq ft facility in Irving, TX, including an aerospace distribution center and an industrial and commercial branch. A division of Shelton, CT-based GE Supply, GE Supply Logistics supplies 126,000 line items through 30 warehouses in the U.S. and Mexico. The company has about 400 employees and supplies parts for the aerospace industry as well as commercial and industrial OEM users.
GE Supply will operate as a stand-alone organization and will report to the newly created Rexel U.S. Holding group currently headed by CEO Dick Waterman and GE Supply CEO Jeff Schaper.
The French parent company Rexel has 1,686 branches in 24 countries. In 2005, Rexel employed 21,000 people, and posted sales of Euro 7.4 billion (US$9.4b). Rexel Inc. reported 4,945 employees at more than 300 branches in 34 states. In the past 18 months, Rexel has acquired electrical distribution businesses in Europe and the U.S. Rexel recently completed acquisitions of Electro-Material of Switzerland, ElettroBergamo of Italy and Capitol Light & Supply of the U.S. Rexel was acquired in 2005 by an investor group including Clayton, Dubilier & Rice, Eurazeo and Merrill Lynch Global Private Equity. Web:
GE Supply reported 2005 revenue of U.S. $2.3 billion. GE Supply has 2,500 employees worldwide with 150 branches in the U.S., Puerto Rico, Ireland, Hungary and Asia. Web: ©2006/2012 Fastener Industry News
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