Publicly traded Genuine Parts Company has completed the sale of its S.P. Richards operations (SPR) through two separate transactions.
Genuine Parts Company (NYSE: GPC) is a distributor of automotive replacement parts, industrial replacement parts and materials and business products. The Atlanta-headquartered company has a distribution network with more than 3,600 worldwide and had revenues of more than $19 billion in 2019.
SPR, acquired by GPC in 1975, is a Smyrna, Georgia-based business products wholesaler that distributes more than 98,000 products to 9,000 resellers and distributors throughout the United States from a network of 44 locations. The business is led by CEO Rick Toppin.
GPC’s first transaction was the sale of SPR’s Cleveland-based Supply Source Enterprises (SSE), comprised of The Safety Zone and Impact Products operations, to H.I.G. Capital.
The Safety Zone and Impact Products manufacture and supply personal protective equipment and janitorial, safety, hygiene and sanitation products to more than 4,000 janitorial and sanitation supply distributors, safety products resellers, foodservice and food processing distributors, and retailers.
GPC, through SPR, acquired Connecticut-based The Safety Zone in May 2016, and Ohio-based Impact Products in June 2014. At the time of these acquisitions, The Safety Zone had revenues of approximately $180 million and Impact Products had revenues of approximately $85 million.
“We are excited to enter into this new chapter with H.I.G. Capital,” said Steve Schultz, CEO and president of SSE. “We have been fortunate over the last few years with the support of Genuine Parts Company to execute on our strategic plan. We are excited about SSE’s growth prospects and believe our customers and employees will benefit immensely from H.I.G.’s support as we embark on our next growth phase.”
“SSE offers an extensive product portfolio and differentiated value-added services to distributors servicing a wide array of end users across several end markets,” said Rahul Vinnakota, a managing director at H.I.G. “We look forward to partnering with Steve and the entire management team to support SSE’s continued growth. H.I.G. will bring additional expertise and resources to SSE to support management as they continue to broaden SSE’s customer base, expand offerings, and enhance services. Importantly, given the critical role of these businesses in the COVID-19 pandemic, we remain committed to ensuring continuity of service to customers while prioritizing the wellbeing of employees.”
The second transaction was the sale of SPR’s core US operations – which provide products and services in four product categories: general office products, technology products and accessories, office furniture, and JanSan and safety supplies – to an unidentified investor group led by industry professionals.
Yancey Jones, the chairman of The Supply Room, a third-generation family-owned and operated office products business headquartered in Ashland, Virginia, released a statement on behalf of the investor group. “”Our group comprises several industry leaders who envision a new, industry-changing alignment and partnership among manufacturers, wholesalers and resellers,” said Mr. Jones. “This represents a shift in the traditional industry supply chain that will eliminate redundant costs and help all partners become more competitive. The acquisition of S.P. Richards’ core U.S. operations represents a major step forward in this process, and we are focused on strengthening our mutually beneficial partnerships and driving long-term, sustainable value creation.”
These sale of S.P. Richards’ operations through these two transactions completes the sale of the business which GPC acquired in 1975. In January 2020, GPC closed the sale of S.P. Richards Canada to Montreal-based office supplies distributor Novexco. In 2019, S.P. Richards Canada’s approximate annual revenues were $50 million.
“The sale of S.P. Richards represents the further streamlining of our operations and a significant step forward in our long-term strategy to optimize our portfolio,” said Paul Donahue, the chairman and chief executive officer of GPC. “With this divestiture, we will continue to opportunistically expand our global footprint and strengthen our focus on sustainable, value-driving initiatives associated with our faster growing and higher margin automotive and industrial businesses.”
H.I.G. specializes in providing debt and equity capital to small and medium-sized companies and invests in management buyouts, recapitalizations, and corporate carve-outs of both profitable as well as underperforming manufacturing and service businesses. Founded in 1993, H.I.G. has invested in more than 300 companies and has a current portfolio of 100 companies with combined sales in excess of $30 billion.
Harris Williams and Robert W. Baird are the financial advisors to H.I.G. Capital on this transaction, J.P. Morgan is the financial advisor to GPC, and B. Riley Financial advised the unidentified investor group.
Private Equity Professional | July 2, 2020
