WESCO International Inc., Pittsburgh, dropped out of the bidding war for Industrial Distribution Group Inc. (IDG), Atlanta, after learning this week that Platinum Equity Advisers LLC, a previous bidder, had topped its bid for the Atlanta-based MRO distributor. WESCO said in an April 22 press release that it would not submit any further bids for IDG.
IDG is a nationwide specialty distributor of maintenance, repair, operating and production products and services including outsourced maintenance, repair, operating, and production (MROP) procurement. The company serves over 13,000 active customers, including General Electric, Borg-Warner Inc., Ford, Duracell, Boeing and has a presence in 43 of the top 75 industrial markets in the United States.
An acquisition of IDG appeared that it would have been a good fit for WESCO since it already owns Bruckner Supply, an outsource company for indirect materials and supply chain services. Its contracts for these services range from $10 million in annual spend to more than $100 million. WESCO had said in a press release announcing its intention to buy IDG that the acquisition of IDG and its management team would augment WESCO’s existing industrial MRO capabilities, adding a broader base of products and services that could have been offered to its large base of national account customers.
IDG, which appeared set to accept the higher bid from Platinum Equity Advisers, received a competing offer from Luther King Capital Management Corp., Fort Worth, Texas, late on April 22. Affiliates of Luther King Capital Management offered to acquire IDG for $12.10 a share in cash. That’s up from Luther King’s previous bid of $11.70 a share. Platinum now has until 5 p.m. Eastern Time April 25 to match or beat the Luther King proposal, IDG said.
The bidding war over IDG started with Platinum’s initial offer of $113 million, or $10.30 per share. On April 16, WESCO trumped the offer by offering to buy Industrial Distribution Group for $11.75 a share for an estimated total enterprise value of approximately $130 million. IDG had originally accepted an offer of $10.30 per share from Platinum Equity Advisers LLC, but then deemed the WESCO bid a “superior proposal.” The private-equity firm had three days through March 21 to come up with a better offer, which it did.