MSC INDUSTRIAL DIRECT CO. INC., the premier distributor of Metalworking and Maintenance, Repair, and Operations (MRO) supplies to industrial customers throughout the United States, has signed a definitive agreement to acquire substantially all of the assets and assume certain liabilities of the North American distribution business of the Barnes Group Inc. With this acquisition, MSC adds a highly complementary provider of fasteners and other high margin consumable products and services (often referred to as Class C items) with an industry-leading field sales force and vendor managed inventory (VMI) solution.
The purchase price will be $550 million and the asset purchase structure results in significant future tax benefits with a net present value estimated to be more than $100 million. Run-rate cost synergies are expected to reach $15-$20 million by fiscal 2015. The acquisition is expected to close during the company's fiscal third quarter, subject to regulatory approvals and customary closing conditions, and will be financed using available cash and borrowings under an anticipated new credit facility and term loan structure. The acquisition is expected to be accretive to cash flow and earnings per diluted share (EPS), including synergies and excluding transaction and integration costs, by contributing an expected incremental EPS of $0.15 to $0.20 and $0.30 to $0.40 in fiscal years 2014 and 2015, respectively. The vast majority of transaction and integration costs will be incurred in fiscal years 2013 and 2014.