Two distributors have made separate acquisitions that give their respective organizations more geographic reach and broader product offerings.
Glen Burnie, Md.-based Signer Equities Inc. purchased the operating assets of Spartan Industrial Products, an industrial rubber products distributor with three locations in the Louisiana/ Texas Gulf Coast Region.
And Bristol, Tenn.-headquartered United Central Industrial Supply Co. bought the assets of Gooding Rubber Co., a supplier of industrial rubber goods to mining and industrial customers in the Midwest. It operates four sites.
Sales terms weren't disclosed in either deal.
Spartan brings seasoned team
Singer said Spartan specialized in the fabrication of industrial, hydraulic and metal assemblies, along with inspection, testing and certification services. It has locations in Houma, Belle Chase and Golden Meadow, La., with customers in the region's energy, marine, transportation and petrochemical industries.
“This moved us in a little bit more with the oil and gas market industry, which is on everyone's radar these days,” said Don Fritzinger, Singer vice president and chief operating officer.
Spartan's management and employees will continue to manage the business as a platform company for Singer, which means it will still do business under the Spartan banner. Fritzinger said while Spartan is a relatively young company—in business about four years—the team is comprised of seasoned veterans.
“The people there are outstanding,” he said. “We look at a lot of companies and when you look at the quality of the people, you can really cut to the chase.”
Singer's Gulf Coast activities to this point was serviced out of Houston, with no physical presence in Louisiana, Fritzinger said. So when this opportunity came up—the deal closed March 1—Singer had no hesitation.
“Spartan had a growth-oriented culture of its people,” he said. “They know how to make money.”
For its part, Spartan had reached the point where it needed help in taking its company up another level. Fritzinger said it was similar to where Singer was at when it became involved with private equity investment firm LLR Partners Inc. in 2008.
“Spartan was looking for a way to go forward,” he said. “These days, you can't stay stagnant. We're tickled to have them in our organization.”
With the addition, Singer now has 17 locations. The 30 Spartan employees bring its work force to 280. The firm doesn't disclose sales.
All Singer sites operate under their own brand names, a different approach than some other distributor organizations that have been growing through acquisition. “We believe the brand identification is with the individual local company,” Fritzinger said. “When we buy them and bring them on, then the name stays in place.”
United Central continues growing
Founded in 1974, United Central has made a number of acquisitions during its history. The Gooding acquisition brings it sites in Woodridge, Ill.; Henderson, Ky.; Marion, Ill.; and St. Louis. That gives United Central 28 locations in 12 states and Western Canada, and the 40 employees boosts it rolls to 350. It does not disclose sales.
“Gooding is a well-respected name in the industrial business in the St. Louis and Chicago areas,” said United Central President Darrel Cole. He noted his firm knew Gooding well from its operations that served the mining industry in southern Illinois, western Kentucky and southeast Indiana.
“We knew the guys and liked the company,” he said. “We felt Gooding's reputation, product line and people would be a great addition to our company.”
Dean Goldbeck, who has led Gooding for the past seven years, will continue to manage the Gooding industrial operations.
Though not United Central's first foray into rubber, Cole said he felt Gooding probably has more expertise in some of the rubber product offerings. Gooding's line includes conveyor belting, hydraulic and industrial hose assembly and adapters, and metal hose products.
“That adds to our knowledge and capabilities,” Cole said. “We added some product lines and a lot of expertise and knowledge.”
It also brings United Central its first entree into some industrial segments, including products for the agriculture market, OEMs and petroleum refineries, he said. United Central likely will continue to operate the sites under the Gooding name and may use the firm as a springboard to acquire other distributors that operate in similar market segments.
More consolidation likely
Both said that more consolidation in the distributor industry is inevitable.
Singer keeps its expertise on the rubber side of the business, focusing on industrial and hydraulic hose, conveyor belting and gaskets. And the candidates they look for have to bring value-added assets, such as hose testing and assembly, and conveyor belt fabrication and installation, Fritzinger said.
Other important factors are a historical degree of expertise and a good culture fit. Singer also encourages the owners to stay on and continue to run the business.
“Everyone has been looking for consolidation to happen much faster than it has,” he said. “There are still a lot of distributors with niches with some degree of value added. In some cases, the original owners may want to retire or take some assets off the table.”
Cole said United Central focuses on candidates that are leaders and well-respected in the market place, have good employees, and can bring growth in specific product lines or geographic areas.
In return, he said his company—as the largest distributor to the mining industry—can help a distributor like Gooding offer a much broader product line to its customers. He noted that United Central does business with more than 1,100 manufacturing partners and offers roughly 60,000 SKUs.