If the FTC evaluates this deal by comparing it to other regional construction supplies distributors, it could pose problems for CD&R and Sterling. Colony Hardware is another regional competitor with a geographic footprint of 36 branches covering the Northeast, Florida and Dallas/Ft. Ram operates 43 branches, mostly in the Gulf and Southeastern regions. The next-largest construction supplies distributor in the United States that is a direct competitor to the newly expanded White Cap is probably Ram Tool, a regional player headquartered in Birmingham, Ala. No deal of this size goes unchallenged by competitors. As you might guess, White Cap has an extraordinarily talented leadership team. In 2019, the company reported sales of just over $3 billion with an EBITDA of 10.8% and the vast majority of that growth was organic. When I started, the company’s revenues were well under $900 million, and we were unprofitable. I served as vice president of marketing for White Cap from 2010 to 2017, reporting to Stegeman. I expect the combined entity to be called White Cap. 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.
Together, they enjoy more than $4 billion in annual sales through 400 branches to 265,000 customers and employ about 7,500 people. These two companies are, by far, the largest distributors in the concrete construction supplies industry. 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. 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.ĬD&R will own 65% of the combined entity, and Sterling will own the rest. If you want to see the future of distribution, look no further than yesterday’s announcement that private equity firms Clayton, Dubilier & Rice and The Sterling Group have combined two construction supply heavyweights under one roof – pending regulatory approval. Clayton, Dubilier & Rice and The Sterling Group Create a New Industry Giant
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