One Equity Partners has completed the carve-out of ORS MEDCO, a distributor of maintenance and repair products to the industrial and automotive aftermarket sectors, from Essendant.
Essendant, rebranded from United Stationers in 2015, is a Deerfield, IL-headquartered distributor of office supplies, products, and furniture; janitorial and break room supplies; industrial supplies; and automotive aftermarket tools and equipment. Essendant, with annual revenues of more than $5 billion, was acquired by Sycamore Partners in January 2019 and its operations were merged with office supply giant Staples, which Sycamore took private in September 2017.
ORS MEDCO distributes safety and security products, tools, body shop and repair products, welding, paint, chemicals, and abrasives through its ORS Nasco, Medco, and Nestor distribution networks.
- Medco, a distributor of industrial tools and autobody refinish and repair equipment with more than 100,000 SKUs, was founded in 1930 in Philadelphia as Liberty Bell Equipment Corporation and rebranded as Medco (Manufacturers Equipment Distribution Company) in 1970. In 2014, Medco was acquired by Essendant.
- ORS Nasco, a Tulsa-based distributor of industrial supplies with more than 80,000 SKUs, was founded in 1959 and acquired by Brazos Private Equity in 2005. The company was sold to Essendant in 2007.
- Nestor, a Largo, FL-based distributor of tools, equipment and supplies to the transportation industry, was acquired by Essendant in 2015 from Carousel Capital.
Today, ORS MEDCO is headquartered near Chicago in Deerfield, IL and has more than 1,100 employees and 35 facilities that serve over 15,000 independent distributors, national distributors and online resellers.
“We are excited to partner with the management team led by CEO Chris Kempa to provide them with capital and operational resources that will allow them to pursue the next chapter of growth as an independent company,” said David Han, a senior managing director at OEP. “This acquisition is well-aligned with OEP’s historic focus on structuring carve-outs of attractive industrial businesses in close partnership with management teams and corporate sellers.”
Mr. Kempa will work with Manuel Perez de la Mesa, the vice chairman and recently retired CEO of Pool Corporation, who will serve as the chairman of ORS MEDCO. Pool is a publicly traded (NASDAQ: POOL.O) distributor of swimming pool supplies and equipment; and irrigation and landscape products. Pool was a portfolio company of Code, Hennessey & Simmons beginning in 1993 and went public in 1995. Today it has $3 billion in annual revenue and is headquartered near New Orleans in Covington, LA. Mr. Perez de la Mesa led Pool from 1998 to 2018 and grew the company’s revenue at a 10% CAGR and total shareholder returns at a 22% CAGR.
“OEP has an excellent reputation for growing industrial businesses in partnership with management that position them for accelerated growth and market expansion,” added Mr. Kempa. “We are thrilled to become an independent company through our partnership with OEP and believe that we will be able to increase and expand sales to existing and new customers based on ORS MEDCO’s market-leading wholesale distribution capabilities and continued focus on providing exceptional customer service.”
OEP, founded in 2001, was spun out of JP Morgan in 2015. The firm invests from $30 million to $300 million in industrial, healthcare, and technology companies that are based in North America and Europe. Earlier this month, OEP held a final closing of its seventh fund, One Equity Partners VII LP, with $1.75 billion in total capital commitments, the largest fund that OEP has ever raised. OEP has offices in New York, Chicago and Frankfurt.
Sycamore Partners invests in consumer, distribution and retail-related companies. The firm’s portfolio companies include Coldwater Creek, CommerceHub, Hot Topic, Staples, Talbots, The Limited and Torrid. Sycamore has approximately $10 billion in assets under management and is headquartered in New York.
© 2019 Private Equity Professional | October 18, 2019
