ACQUISITIONS: Wilmar buys MRO rival Barnett

In one fell swoop, $225 million repair and maintenance products cataloger Wilmar Industries has doubled its share of the MRO market, by agreeing to buy $269.4 million plumbing and electrical supplier Barnett. Under the terms of the agreement, Wilmar will pay Barnett stockholders $13.15 in cash for each Barnett share, or $213.9 million.

Jacksonville, FL-based Barnett had been on the selling block for about a year, industry analysts say. Waxman Industries, which owned 44% of Barnett, was $128 million in debt and needed to raise cash. Pending shareholder approval, the deal is expected to close in the third quarter.

Although Barnett and Wilmar sell almost identical supplies – mostly plumbing, electrical, and hardware products – they sell to different customers. Wilmar uses its four annual catalogs and its 400-person field sales force to sell primarily to maintenance managers of apartment buildings. Barnett, which mails six catalogs a year and has a field sales force of 140 people, sells to professional contractors and equipment resellers.

Under Wilmar, “Barnett’s management will have an important say in the running of the merged company,” says William F. Jelin, an analyst with St. Louis-based investment bank Stifel Nicolaus, which he says Barnett didn’t have under Waxman Industries.

In fact, “we hope to learn from Barnett’s expertise in the direct marketing industry so that we can further leverage our databases,” says William R. Sanford, Wilmar’s chief financial officer. “We think that [an increased emphasis on] direct mail will more effectively leverage our relationships with customers.”

A sizable force

The combined company will have nearly $600 million in annual sales, 2,100 employees, and 160,000 customers in the U.S. (including Puerto Rico) and Canada. Barnett marks Wilmar’s second major acquisition in less than a year; in December 1999, the Moorestown, NJ-based Wilmar agreed to buy plumbing supplier J.A. Sexauer and its affiliates, Sexauer Ltd. and Trayco of South Carolina, for $85 million.

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