MSC to acquire Barnes Distribution

Deal valued at $550 million is expected to close by late March.

MSC Industrial Direct has signed a definitive agreement to acquire the North American distribution business of the Barnes Group Inc.

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 solution, the company said in a statement announcing the acquisition.

The purchase price will be $550 million and the acquisition is expected to close during the company's fiscal third quarter.

Headquartered in Cleveland, BDNA is a distributor of fasteners and other high-margin, low-cost consumables with a broad distribution footprint throughout the U.S. and Canada. BDNA has a presence with customers across manufacturing, government, transportation and natural resources end-markets. The business services roughly 31,000 customers with nearly 1,400 associates, including over 800 field sales associates, and offers more than 55,000 product SKUs. BDNA had unaudited sales of $350.7 million for calendar year 2012.

"I look forward to welcoming BDNA into the MSC family. BDNA is a high-quality business with a first-rate team, a compelling product offering, strong customer value proposition and a broad geographic foot print including Canada," said Erik Gershwind, MSC chief executive officer and president. "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. BDNA checks all of the boxes strategically, and provides strong near-term accretion."

Jeff Kaczka, executive vice president and chief financial officer, added, "Today is an exciting day and this transaction is 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. On top of that, we are getting a new platform that provides several growth avenues for the company. All together, that results in a highly accretive transaction by fiscal 2015."

Gershwind said the acquisition will nearly double MSC's existing sales force and help MSC achieve its goal of $4 billion in revenues by 2016.