MSC Industrial Paying $550M for Barnes Distribution

Feb. 25, 2013
“Adjacent product expertise” Improves ‘inventory management’ portfolio

MSC Industrial Direct Co. Inc. is buying Barnes Group Inc., including substantially all of its assets and certain, undetailed liabilities, in a $550-million deal according to a definitive agreement, the two companies announced. MSC stated that the Cleveland-based distributor of fasteners and other consumable products and services (described as Class C items) would be “highly complimentary.”

Erik Gershwind, CEO and president of MSC Industrial, stated: "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."

MSC Industrial is a distributor of industrial supplies, especially for products and consumables for metalworking operations, and Maintenance, Repair and Operations (MRO) supplies in general. It said the purchase would be completed during its own fiscal third quarter, subject to regulatory approvals and closing conditions. MSC will finance the acquisition using available cash and “borrowings” from an anticipated new credit facility and term loan structure.

MSC stated it expects the Barnes assets will be accretive to its earnings.

The Barnes Group has an estimated 31,000 customers in manufacturing, government, transportation and natural resources sectors. Its services emphasize lower total cost for customers' inventory management via storeroom organization and vendor-managed inventory. Barnes’ catalog of products includes over 55,000 SKUs, and its 2012 sales were estimated at $300 million.

Barnes Group brings about 1,400 associates to the MSC Industrial organization, including over 800 field sales representatives.

Jeff Kaczka, MSC’s executive vice president and CFO, said Barnes represents "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,” Kaczka said. “On top of that, we are getting a new platform that provides several growth avenues for the company."

About the Author

Robert Brooks | Content Director

Robert Brooks has been a business-to-business reporter, writer, editor, and columnist for more than 20 years, specializing in the primary metal and basic manufacturing industries. His work has covered a wide range of topics, including process technology, resource development, material selection, product design, workforce development, and industrial market strategies, among others. Currently, he specializes in subjects related to metal component and product design, development, and manufacturing — including castings, forgings, machined parts, and fabrications.

Brooks is a graduate of Kenyon College (B.A. English, Political Science) and Emory University (M.A. English.)