Boston, MA 09/11/2014 (wallstreetpr) – United Stationers Inc. (NASDAQ:USTR) has signed a deal to add MEDCO, a U.S. automotive aftermarket tools and supplies wholesaler, to its portfolio. The deal includes the acquisition of MEDCO’s Canadian affiliate known as G2S. The companies have agreed on an additional $10 million payment as part of the deal tied to performance and will be spread over three years.
United Stationers Inc. (NASDAQ:USTR), a $1.6 billion company engaged in the distribution of business products, will expand its operations into the auto aftermarket segment with the acquisition of MEDCO. The wholesaler of automotive aftermarket tools is headquartered in Philadelphia, Pennsylvania. MEDCO is regarded as the largest wholesaler in the automotive aftermarket in North America and its particular areas of focus include Paint, Body and Equipment and Tool and Equipment. It deals in more than 50,000 products and has a network of 350 manufacturers.
Annual sales of $240 million
Together with its Canadian unit, G2S, MEDCO has annual sales of about $240 million. The company’s customers include traditional distributors, mobile tool dealers and retailer. It has nine distribution centers in the U.S. and three such centers in Canada under G2S.
Commenting on the deal with MEDCO, United Stationers Inc. (NASDAQ:USTR)’s President and CEO, P. Cody Phipps, said the acquisition would support their strategy to diversify into higher-growth and higher margin categories. He further stated that the businesses, MEDCO and G2S, have deep product insight coupled with exceptional customer service, which would be an added advantage to United Stationers.
In addition to taking over the assets of MEDCO and G2S, United Stationers will also add employees from the companies to its side. The acquisition deal is expected to close in 4Q2014, but the closing date is subject to the customary closing conditions. Although the companies agreed to an acquisition value of $130 million, United Stationers will make an additional payment of $10 million in a period of three years based on certain performance achievements.
Earnings accretive
United Stationers Inc. (NASDAQ:USTR) expects the acquisition to boost its earnings within the first year of closing the deal. It will fund the acquisition through cash on hand and a revolving credit facility.
