Barnes Group Deal Could Signal Bigger MRO Changes
3/14/2013 1:33:00 AM
FEATURE
MSC Industrial Direct’s agreement to acquire the North American distribution business (BDNA) of the Barnes Group for $550 million could signal big changes in the MRO market.
“With this acquisition, MSC adds a highly complementary provider of fasteners and other high margin consumable products and services (often referred to as Class C items) with an industry-leading field sales force and vendor managed inventory (“VMI”) solution,” MSC stated in a press release.
Headquartered in Cleveland, OH, BDNA distributes fasteners and other high margin, low cost consumables with a broad distribution footprint throughout the U.S. and Canada, with 2012 sales of approximately $300 million.
“With this transaction, MSM will become a strong player in the fasteners and other consumable products segments,” according to SeekingAlpha.com.
Analysts agree that MSM bought Barnes reasonably at 1.8 times revenues, slightly higher than its average revenue multiples of 1.22 times.
The deal has prompted speculation that Lawson Products could be MSC’s next target.
“The acquisition is a clear signal that the North American MRO market is ripe for consolidation,” according to SeekingAlpha.com.
The deal puts MSM into new product category and closer competition with Fastenal Co.and Lawson Products.
“Lawson sounds like a good acquisition target for MSM if it plans to shore up its market share in the fastener category,” with more than 300,000 different products for sale.
Lawson’s current market cap of $131 million makes the company an easy acquisition target, according to SeekingAlpha.com reports.
And after years of struggle, Lawson earnings are on the rise, leading to speculation that the company could grow 11% earnings for the next five years. ©2013 GlobalFastenernews.com
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