NEW YORK, Aug. 11, 2020 /PRNewswire/ -- Clayton,
Dubilier & Rice today announced an agreement with HD Supply
Holdings, Inc. (NASDAQ:HDS) under which CD&R funds will lead an
investment to acquire HD Supply's Construction & Industrial
business (also known as "White Cap"), a leading distributor of
specialty concrete and construction products, and combine it with
the Construction Supply Group ("CSG"), a leading distributor of
specialty concrete and masonry accessories. Upon the closing of
both transactions, CD&R funds will hold a 65% ownership
interest in the combined company, and the current shareholders of
CSG, led by The Sterling Group, will hold a 35% interest. The
combined transaction, valued at approximately $4 billion, is subject to customary regulatory
approvals.
The combination is intended to create a leading North American
distributor of a diverse mix of concrete accessories and specialty
construction and safety products with more than $4 billion in annual revenue. White Cap operates
270 branches with approximately 5,500 employees and offers more
than 400,000 SKUs to 200,000 customers. With 130 branches and
approximately 2,000 employees, CSG has a highly complementary
footprint to White Cap in terms of product offering and geography,
offering more than 60,000 SKUs to 65,000 customers.
"We developed strong confidence in the White Cap management team
during our prior ownership of HD Supply, as they successfully
managed through the global financial crisis," said Nate Sleeper, CD&R's Chief Executive
Officer. "Over the past several years, the CSG team has built a
strong new leader in the industry. We are excited to work
alongside both teams to capitalize on the many promising
value creation opportunities we believe this strategic combination
offers."
John Stegeman, White Cap's
current CEO, and Alan Sollenberger,
White Cap's current President, are expected to lead the new
combined business, which will include the White Cap, Home
Improvement Solutions and Brafasco businesses, as well as
CSG. CD&R Operating Partner Phil Knisely, former
executive vice president and corporate officer of Danaher
Corporation, will serve as Chairman of the combined company.
"This transformational combination simultaneously increases our
product and service offering, capabilities, and diversification and
establishes our business as a focused, independent company," said
John Stegeman. "We are enthusiastic
about the opportunity to join forces with the many talented
associates and leaders at CSG to enhance our collective
ability to serve our customers. Following this transaction, we
will be very well positioned to pursue both organic and inorganic
growth opportunities aligned with our strategic priorities."
"We are excited about the opportunities this will bring to our
employees, customers, and suppliers," said Mitch Williams, Chief Executive Officer of CSG.
"We look forward to our new partnership with CD&R and the
continued support of The Sterling Group as we continue to
seek growth opportunities to better serve our customers."
"We are proud of the business the CSG team has built over the
last four years and see this combination as the next step in our
vision to build the leading construction supply distributor in
North America," said Brian Henry, Partner at The Sterling Group.
The acquisition of White Cap is expected to close in
October 2020 and is not conditioned
on the closing of the acquisition of CSG.
Goldman Sachs & Co, LLC served as financial advisor and
Jones Day served as legal counsel to
HD Supply on the transaction. Deutsche Bank Securities Inc.; RBC
Capital Markets, LLC; BNP Paribas Securities Corp.; and Credit
Suisse served as financial advisors and Debevoise & Plimpton
served as legal counsel to CD&R on the transaction. Jefferies
LLC served as financial advisor and McDermott Will & Emery served as legal
counsel to The Sterling Group and CSG. CD&R has obtained
committed financing from Deutsche Bank Securities Inc.; RBC Capital
Markets, LLC; Jefferies LLC; BNP Paribas Securities Corp.; and
Credit Suisse.
About White Cap
White Cap serves as a one-stop shop providing concrete
accessories and chemicals, tools and equipment, building materials
and fasteners, erosion and waterproofing and safety products to
professional contractors by meeting their distinct and customized
supply needs in non-residential, residential and industrial
applications. White Cap operates 270 branches with approximately
5,500 employees and offers more than 400,000 SKUs to 200,000
customers. For more information, visit www.whitecap.com.
About Construction Supply Group
CSG is a leader in the distribution of specialty construction
materials, accessories and tools, primarily for professional
concrete and masonry contractors in the
United States and Canada.
With over 130 branches and approximately 2,000 employees, CSG
offers over 60,000 SKUs to over 65,000 customers. For more
information, visit www.constructionsupplygroup.com.
About Clayton, Dubilier & Rice
Founded in 1978, Clayton, Dubilier & Rice is a private
investment firm. Since inception, CD&R has managed the
investment of more than $30 billion
in 93 companies with an aggregate transaction value of more than
$140 billion. The Firm has offices in
New York and London. For more information,
visit www.cdr-inc.com.
About The Sterling Group
Founded in 1982, The Sterling Group is a private equity
investment firm that targets controlling interests in basic
manufacturing, distribution, and industrial services companies.
Typical enterprise values of these companies range from
$100 million to $750 million. Sterling has sponsored the buyout
of 57 platform companies and numerous add-on acquisitions for a
total transaction value of over $14.0
billion. Currently, Sterling has over $4.0 billion of assets under management. For
further information, please visit www.sterling-group.com.
About HD Supply
HD Supply is one of the largest industrial distributors in
North America. The company
provides a broad range of products and value-add services to
approximately 500,000 customers with leadership positions in the
maintenance, repair and operations and specialty construction
sectors. Through approximately 270 branches and 44 distribution
centers in the U.S. and Canada,
the company's approximately 11,500 associates provide localized,
customer-tailored products, services and expertise. For more
information, visit www.hdsupply.com
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