Described as its largest acquisition ever, ABC Supply Co. has signed an agreement to acquire Bradco Supply Corp. The boards of both companies approved the purchase and expect it to close by the end of June.
Beloit, WI-based ABC Supply operates more than 350 branches in 45 states and the District of Columbia. The privately held company, which recorded sales of about $2.6 billion last year, operates the ABC Supply Catalog Division and the Town & Country Division as well as several affiliate companies.
Based in Avenel, N.J., Bradco Supply Corp. operates 129 branches in 30 states with sales of about $1.5 billion in 2009. The combined company will operate 479 locations in 45 states and the District of Columbia, and have sales of more than $4 billion.
Chris Kampe, managing director with investment firm Tully & Holland, says the ABC Supply deal is a story of the No. 1 distributor of roofing supplies acquiring one of its largest competitors. “Both companies wholesale largely the same product categories (roofing, doors, windows, waterproofing, insulation, etc.). ABC already operates in the states that Bradco serves, so this really isn’t a geographic expansion/new market rationale.”
What’s more, Kampe says the sale of Bradco is “an exit for private equity group Advent International, which had acquired the company in 2008. Following the acquisition, Bradco ramped up its expansion acquiring four regional distributors in different parts of the country. “These acquisitions likely caught the attention of ABC and probably posed the threat of increased competition,” Kampe adds.
The timing of the acquisition may be ideal, Kampe says, as ABC is “probably picking up Bradco at or near the bottom of the cycle. Building supply/construction markets are highly cyclical and lag general economic conditions.”