Automotive and industrial replacement parts distributor Genuine Parts Company (NYSE: GPC) announced that it is set to acquire Kaman Distribution Group (KDG) in a $1.3 billion cash deal that is said to strengthen GPC’s market position and expand growth opportunities.
Pursuant to the December 16 deal, Genuine Parts, via its wholly-owned subsidiary, industrial distributor Motion Industries, Inc., will buy “power transmission, automation and fluid power industrial distributor and solutions provider” Kaman Distribution from private investment firm Littlejohn & Co., LLC, which originally purchased Kaman Distribution for $700 million in cash in summer 2019.
As noted in the filings, the reported benefits of the acquisition are more than $50 million in annual run rate synergies within the next three years; leverage at closing of approximately 2x, which is within GPC’s goal levels; anticipated liquidity of more than $2 billion. Moreover, upon closing, this will be funded by “existing revolver and accounts receivable sales agreement.” The transaction is expected to be accretive to GPC’s adjusted earnings in the first year after the closing.
“Motions highly synergistic acquisition of KDG significantly enhances our scale and further strengthens our market-leading position,” Paul Donahue, Chairman and CEO of GPC said in a press release. “In addition, this combination creates opportunities for accelerated long-term growth, profitability and cash flow.”
“We are very pleased to combine our two great businesses and leverage our collective resources and expertise to accelerate profitable growth,” Ben Mondics, President and CEO of KDG, said in a press release.
According to the filings, KDG’s anticipated revenue for 2022 is approximately $1.1 billion. Meanwhile GPC’s revenue for 2020 was $16.5 billion and Motion had more than $6 billion in sales.
The deal is expected to close in Q1 2022 subject to customary closing conditions.
Littlejohn & Co and Kaman Distribution Group are represented by Gibson, Dunn & Crutcher LLP and their financial advisor is Baird. Genuine Parts Company is represented by King & Spalding LLP and its financial advisor is Greenhill & Co., LLC.
Prior to the closing, GPC’s stocks were valued at $133.02 on December 15, the day of the announcement on December 16 the stock was valued at $136.01, about a week later on December 23 stock closed at $135.25.
Some of Genuine Parts’ previous acquisitions include acquiring Dutch company PartsPoint Group in June 2019 for $330 and in February 2019 Motion bought Axis in a move that expands its automation solutions. Furthermore, in June 2020 the company sold two S.P. Richards core U.S. operations to two separate investor groups in a move to streamline its operations and focus on expanding its opportunities and market position in the automotive and industrial businesses.