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The White Cap-Construction Supply Group Deal
CD&R is buying HD Supply Construction & Industrial – once and now again known as “White Cap.” The firm is combining White Cap with Sterling’s Construction Supply Group (CSG), which is made up of 17 regional distributors across the US and Canada. CD&R will own 65% of the combined entity, and Sterling will own the rest. According to press releases, the combined transaction is worth about $4 billion, which roughly breaks out as $2.9 billion for White Cap and $1.1 billion for CSG.
These two companies are, by far, the largest distributors in the concrete construction supplies industry. Together, they enjoy more than $4 billion in annual sales through 400 branches to 265,000 customers and employ about 7,500 people. White Cap’s John Stegeman and Alan Sollenberger will serve as CEO and president, respectively, of the combined company, which no doubt means its headquarters will be in Atlanta instead of Denver, where CSG is located today. I expect the combined entity to be called White Cap.
In my writing, keynotes and webinars, I’ve been forecasting increased consolidation as outside disruptors continue to invade wholesale distribution. The industry has been spared the waves of disruption that have rolled through retail, but now the barbarians are at the gates.
If you’re a distributor, keep an eye on White Cap, which – thanks to the help of CD&R and The Sterling Group – is modeling one of the only viable paths to a successful future. If you’re an investor, pay attention to the distributors who have a plan to lead through the disruption instead of following. If you’re a regulator, look at the challengers distributors are trying to fend off instead of smaller competitors, many of which won’t make it anyway if they don’t develop their own plans for consolidation.
Consolidation is coming. You can lead, follow or get out of the way but you cannot stop it. This merger reveals how aggressive companies plan to build the scale necessary to compete in the future, and I suggest you watch it closely to understand as you build your own long-term plans.
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By Ian Heller, Jonathan Bein
4.7
66 ratings
CD&R is buying HD Supply Construction & Industrial – once and now again known as “White Cap.” The firm is combining White Cap with Sterling’s Construction Supply Group (CSG), which is made up of 17 regional distributors across the US and Canada. CD&R will own 65% of the combined entity, and Sterling will own the rest. According to press releases, the combined transaction is worth about $4 billion, which roughly breaks out as $2.9 billion for White Cap and $1.1 billion for CSG.
These two companies are, by far, the largest distributors in the concrete construction supplies industry. Together, they enjoy more than $4 billion in annual sales through 400 branches to 265,000 customers and employ about 7,500 people. White Cap’s John Stegeman and Alan Sollenberger will serve as CEO and president, respectively, of the combined company, which no doubt means its headquarters will be in Atlanta instead of Denver, where CSG is located today. I expect the combined entity to be called White Cap.
In my writing, keynotes and webinars, I’ve been forecasting increased consolidation as outside disruptors continue to invade wholesale distribution. The industry has been spared the waves of disruption that have rolled through retail, but now the barbarians are at the gates.
If you’re a distributor, keep an eye on White Cap, which – thanks to the help of CD&R and The Sterling Group – is modeling one of the only viable paths to a successful future. If you’re an investor, pay attention to the distributors who have a plan to lead through the disruption instead of following. If you’re a regulator, look at the challengers distributors are trying to fend off instead of smaller competitors, many of which won’t make it anyway if they don’t develop their own plans for consolidation.
Consolidation is coming. You can lead, follow or get out of the way but you cannot stop it. This merger reveals how aggressive companies plan to build the scale necessary to compete in the future, and I suggest you watch it closely to understand as you build your own long-term plans.