Frontenac to Sell A.H. Harris to HD Supply

Frontenac has entered into an agreement to sell A.H. Harris Construction Supplies, a distributor of specialty construction products, to publicly-traded HD Supply Holdings for approximately $380 million. This transaction is expected to close before the end of the first quarter.

A.H. Harris, with annual sales of $380 million over the last twelve months, supplies construction products and equipment to contractors, construction companies and governments that are active in the concrete construction, repair and restoration, road and bridge, rebar and rebar fabrication, waterproofing and glazing markets. The company has more than 13,000 SKUs from more than 500 manufacturers and maintains 50 facilities in 14 East Coast states. A.H. Harris, led by CEO Brendan Deely, has approximately 600 employees and is headquartered in West Hartford, CT (www.ahharris.com).

Frontenac acquired A.H. Harris in May 2015. In April 2016 the company completed the add-on acquisition of Baltimore-based Kenseal Construction Products, a family-owned distributor of waterproofing; sealants; stucco and EIFS (exterior insulation and finishing systems); glass and glazing; and concrete restoration and repair products. At the time of acquisition, Kenseal had 13 stocking locations along the East Coast (www.kenseal.com).

“Frontenac has greatly enjoyed partnering with the A.H. Harris team in transforming its business. During our ownership, we meaningfully increased the scale of the company’s leadership team, invested in the successful implementation of numerous organic growth initiatives, and through acquisition expanded the company’s product portfolio and end markets. All of these accomplishments contributed to a near doubling of revenue in just 2.5 years,” said Michael Langdon, a Managing Director at Frontenac.

Frontenac invests in lower middle-market businesses that operate primarily in the food, industrial, and services industries. The firm was founded in 1971 and is headquartered in Chicago (www.frontenac.com).

“Our successful investment in A.H. Harris demonstrates the Frontenac playbook at work,” said Neal Sahney, a Vice President at Frontenac. “We leveraged our industrial services executive network to identify a unique investment opportunity; we augmented the company’s management team and board with experienced industry leaders; we leveraged our expertise with family-owned businesses; and we provided the capital to make strategic growth investments and complete a transformational acquisition. We are pleased to have worked with the leadership team to achieve this level of success with A.H. Harris, and we are excited about the company’s future.”

HD Supply (NASDAQ: HDS) was acquired by Bain Capital, The Carlyle Group, and Clayton, Dubilier & Rice in 2007 from The Home Depot and was taken public in 2013. HD Supply operates through three companies: HD Supply White Cap, a distributor of specialty hardware, tools and concrete accessories for professional contractors; HD Supply Brafasco, an industrial distributor in Canada that primarily focuses on servicing fasteners/industrial supplies; and HD Supply Home Improvement Solutions, a provider of remodeling and construction supplies to small remodeling contractors and trade professionals through local retail outlets. HD Supply is headquartered in Atlanta and has annual revenues in excess of $7.5 billion (www.hdsupply.com).

“HD Supply will continue to focus on extending its position through disciplined organic growth execution and by selectively acquiring complementary companies such as A.H. Harris,” said Joe DeAngelo, CEO of HD Supply. “We are excited to welcome the A.H. Harris associates to our HD Supply family.”

Houlihan Lokey and Lincoln International were the financial advisors to A.H. Harris on this transaction.

© 2018 Private Equity Professional | January 4, 2018

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