Distribution Solutions Group’s Operating Company, Lawson Products, Announces Strategic Acquisition
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Insights
The acquisition of Emergent Safety Supply (ESS) by Lawson Products, a subsidiary of Distribution Solutions Group, Inc. (DSG), is a strategic move that could significantly enhance DSG's product offerings and market reach in the safety products sector. By expanding Lawson's safety product line fourfold, DSG is positioning itself as a more comprehensive supplier in this niche, which is particularly important as businesses increasingly prioritize workplace safety. The integration of ESS's technical expertise and customer base could lead to cross-selling opportunities and improved customer retention for DSG.
From a financial perspective, the fact that ESS generates annual sales of approximately $13 million and is expected to be accretive to DSG's adjusted EBITDA margins suggests a positive impact on DSG's profitability. This implies that ESS has a healthy operating margin that could enhance DSG's overall financial performance. The funding of the acquisition through DSG's cash from operations indicates a strong cash flow position, which is a positive sign for investors looking at the company's financial health.
The acquisition's expected contribution to DSG's adjusted EBITDA margins is noteworthy for investors and stakeholders. EBITDA, which stands for Earnings Before Interest, Taxes, Depreciation and Amortization, is a measure of a company's operating performance. An accretive acquisition means that it is expected to increase per-share earnings, which is typically viewed favorably by the stock market. It also reflects management's confidence in the deal's value creation potential. However, it is important to monitor how the integration process unfolds, as the synergies projected need to be realized to justify the acquisition's financial rationale.
Furthermore, the acquisition is funded through cash from operations, which indicates that DSG is not taking on additional debt for this transaction. This conservative approach to financing could be seen as a prudent use of capital, which may be reassuring to investors concerned about over-leveraging in pursuit of growth.
From a legal and regulatory standpoint, acquisitions such as this one generally require a thorough due diligence process to ensure compliance with antitrust laws and to identify any potential legal risks. The statement does not detail the due diligence conducted, but such a process is critical for assessing the value and risks associated with the acquisition. Additionally, the integration of ESS into Lawson Products will likely involve the harmonization of policies, procedures and compliance measures to meet industry standards and regulatory requirements. This is an important aspect for maintaining corporate governance and minimizing risk post-acquisition.
“We are excited to announce the acquisition of ESS,” said Cesar Lanuza, President & Chief Executive Officer of Lawson Products. “ESS is a leader in the safety products and services market, and this acquisition accelerates Lawson’s safety product expansion plans to better serve customers in all of our end markets. ESS expands Lawson’s safety product offering by over four times. ESS strengthens Lawson's technical expertise necessary to succeed in the safety product category, which will benefit Lawson’s existing customers, and DSG customers more broadly, who need high-quality safety products and services.”
Mary Porter, Chief Executive Officer of ESS commented, “We’re very excited to join Lawson Products and to be a driver of expanding their safety product offering. ESS customers, suppliers and employees will benefit from partnering with Lawson by attracting new customers, leveraging Lawson’s valuable vendor management inventory services, adding additional product categories, and a larger distribution network.”
ESS generates annual sales of approximately
About Distribution Solutions Group, Inc.
Distribution Solutions Group (“DSG”) is a premier multi-platform specialty distribution company providing high touch, value-added distribution solutions to the maintenance, repair & operations (MRO), the original equipment manufacturer (OEM) and the industrial technologies markets. DSG was formed through the strategic combination of Lawson Products, a leader in MRO distribution of C-parts, Gexpro Services, a leading global supply chain services provider to manufacturing customers, and TestEquity, a leader in electronic test & measurement solutions.
Through its collective businesses, DSG is dedicated to helping customers lower their total cost of operation by increasing productivity and efficiency with the right products, expert technical support and fast, reliable delivery to be a one-stop solution provider. DSG serves approximately 170,000 customers in several diverse end markets supported by approximately 3,800 dedicated employees and strong vendor partnerships. DSG ships from strategically located distribution and service centers to customers in
For more information on Distribution Solutions Group, please visit www.distributionsolutionsgroup.com.
About Lawson Products
Lawson Products (Lawson) is the solution to all MRO needs. Since 1952, Lawson has been helping make customers’ jobs easier by improving efficiency, productivity, and overall performance. Lawson is dedicated to helping customers in the
About Emergent Safety Supply
Emergent Safety Supply (ESS) is a national distributor of safety products. ESS was established in 1985 and purchased by Mary Porter in 2011. Over the past 12 years, ESS has evolved from a local/regional distributor into a national distributor, carrying leading brands of safety supplies, personal protective equipment, hand protection, hearing protection, eyewear, prescription eyewear, head protection, ergonomics, first aid, fall protection, gas monitors, signage, and more. ESS uses supply chain integration to streamline processes from vendor to customer, while stocking a wide variety of products and generally ships on a same day basis. For more information, please visit www.emergentsafety.com.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. The terms “aim,” “anticipate,” “believe,” “contemplates,” “continues,” “could,” “ensure,” “estimate,” “expect,” “forecasts,” “if,” “intend,” “likely,” “may,” “might,” “objective,” “outlook,” “plan,” “positioned,” “potential,” “predict,” “probable,” “project,” “shall,” “should,” “strategy,” “will,” “would,” and other words and terms of similar meaning and expression are intended to identify forward-looking statements. Forward-looking statements can also be identified by the fact that they do not relate strictly to historical or current facts. Such forward-looking statements are based on current expectations and involve inherent risks, uncertainties and assumptions, including factors that could delay, divert or change any of them, and could cause actual outcomes to differ materially from current expectations. DSG can give no assurance that any goal or plan set forth in forward-looking statements can be achieved and DSG cautions readers not to place undue reliance on such statements, which speak only as of the date made. DSG undertakes no obligation to release publicly any revisions to forward-looking statements as a result of new information, future events or otherwise. Actual results may differ materially from those projected as a result of certain risks and uncertainties. Certain risks associated with DSG’s business are also discussed from time to time in the reports DSG files with the SEC, including DSG’s Annual Report on Form 10-K, DSG’s Quarterly Reports on Form 10-Q and DSG’s Current Reports on Form 8-K, which should be reviewed carefully. In addition, the following factors, among others, could cause actual outcomes and results to differ materially from those discussed in the forward-looking statements: (i) unanticipated difficulties or expenditures relating to the mergers; (ii) the risk that stockholder litigation in connection with the mergers results in significant costs of defense, indemnification and liability; (iii) any problems arising in combining the businesses of Lawson Products, TestEquity and Gexpro Services, which may result in the combined company not operating as effectively and efficiently as expected; and (iv) the risks that DSG may encounter difficulties integrating the business of DSG with the business of other companies that DSG has acquired or has otherwise combined with, that DSG may not achieve the anticipated synergies contemplated with respect to any such business or transactions and that certain assumptions with respect to such business or transactions could prove to be inaccurate.
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Company:
Distribution Solutions Group, Inc.
Ronald J. Knutson
Executive Vice President, Chief Financial Officer and Treasurer
1-888-611-9888
Investor Relations:
Three Part Advisors, LLC
Steven Hooser / Sandy Martin
214-872-2710 / 214-616-2207
Source: Distribution Solutions Group, Inc.
FAQ
What company completed the acquisition of Safety Supply Illinois LLC, DBA Emergent Safety Supply (ESS)?
Where is Emergent Safety Supply (ESS) based?
What is the expected impact of the acquisition on Lawson Products' safety product expansion plans?
What are the annual sales of ESS?
How is the acquisition being funded?
