MSC Industrial to enter Canada with $550 million Barnes unit buy

Fri Feb 22, 2013 10:59am EST
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By Sagarika Jaisinghani

(Reuters) - Industrial products distributor MSC Industrial Direct Co Inc (MSM.N: Quote) said it would buy the North American distribution business of Barnes Group Inc (B.N: Quote) for $550 million to gain access to the metalworking and maintenance, repair and operations (MRO) market in Canada.

Barnes shares rose as much as 14 percent to $27.85 on the New York Stock Exchange in early trading. MSC's shares rose 4 percent to $86.50.

The acquisition would nearly double MSC's sales force and boost revenue to about $4 billion by 2016, Chief Executive Erik Gershwind said in a statement.

MSC had total revenue of $2.36 billion in the year ended September 1.

Cleveland, Ohio-based Barnes Distribution North America (BDNA), which has 1,400 employees, distributes fasteners and other consumables to the manufacturing, transportation and natural resources industries. It had sales of about $300 million in 2012.

"We're excited to sell MSC's broader portfolio of MRO supplies to customers in industries that are new to us, such as transportation and natural resources," Gershwind told analysts on a conference call.

The acquisition also adds fasteners, fittings, fuses and other high-margin consumable products and services - often referred to as Class C items - to MSC's portfolio, the company said.

"Barnes Group is further advancing its strategy of adjusting the business portfolio to focus on core manufacturing and after-market capabilities," said Barnes CEO Gregory Milzcik, who is set to retire on May 3.   Continued...