Clayton, Dubilier & Rice (CD&R) has signed an agreement with HD Supply to acquire its waterworks business unit for $2.5 billion.
The waterworks business unit (Waterworks) is a distributor of water, sewer, storm, fusible piping, and fire protection infrastructure products that are used by contractors and municipalities in all aspects of the water, wastewater, clean water, landfill, energy, and fire protection industries. The company operates a national network of 244 branches in 46 states with a sales team of more than 1,700 sales representatives serving a customer base of more than 37,000 municipalities, private water companies and contractors. Waterworks is headquartered in St. Louis (www.hdswaterworks.com).
HD Supply (NASDAQ:HDS), the parent of Waterworks, is an industrial distributor of a range of products and provides services to approximately 500,000 customers in the maintenance, repair and operations, infrastructure and power, and specialty construction sectors. The company was founded in 1974 as Maintenance Warehouse and was acquired by Home Depot in 1997. In 2007 the company was purchased by Bain Capital, The Carlyle Group, and CD&R. The company was taken public in June 2013. HD Supply is headquartered in Atlanta (www.hdsupply.com).
“Waterworks represents an attractive opportunity to invest in the leading distributor in the US waterworks market, which stands to benefit from tailwinds in construction activity and municipal infrastructure spending,” said CD&R Partner J.L. Zrebiec. “With strong national, regional and local positions and a reputation for customer service and reliability, the company is in a very favorable long-term position.”
“Through our prior investment in HD Supply, we have a great appreciation for the strength and quality of the Waterworks business and the exceptionally talented Waterworks management team,” said CD&R Partner Nate Sleeper. “We are very excited to work alongside them once again to continue to build on the company’s leading market position and pursue the many significant profitable growth opportunities available to it as a freestanding business.”
Once this transaction is completed, Jim Berges, a CD&R Partner, will serve as Chairman of Waterworks. Mr. Berges was Chairman of HD Supply from 2007 to 2015. Previously, Mr. Berges served as Vice Chairman and President of Emerson Electric. Steve LeClair, who has served as the President of Waterworks since 2011, will become the Chief Executive Officer.
CD&R invests in European and US-based businesses. Since founding in 1978, the firm has invested $23 billion in 72 companies across a range of industries with a total transaction value of approximately $100 billion. CD&R was founded in 1978 and is based in New York and London (www.cdr-inc.com).
Committed financing for this transaction has been obtained by CD&R from Barclays; BofA Merrill Lynch; Citi; Credit Suisse Securities; Deutsche Bank; J.P. Morgan; and RBC Capital Markets.
© 2017 Private Equity Professional | June 9, 2017
