Genuine Parts' S.P. Richards Unit To Tie Up With Essendant
Zacks Investment Research | Apr 12, 2018 09:16PM ET
Per a Reuters news, Genuine Parts Company (NYSE:GPC) announced to spin off its wholesale distribution business, S.P. Richards. Thereafter, the S.P. Richards business and the Essendant will be combined to create a new entity named Essendant, which will be headed by Essendant’s chief executive officer (CEO) Ric Phillips. CEO of S.P. Richards, Rick Toppin will be the chief operating officer of the new entity. The combination of Essendant and S.P. Richards will result in a more competitive business products distributor with higher scale and service capabilities along with greater ability to support customers.
The deal, combining Essendant and S.P. Richards, is structured as a Reverse Morris Trust. The transaction implies a valuation of S.P. Richards of approximately $680 million. Atlanta, GA-based Genuine Parts will receive $347 million in cash while the shareholders of the company will own around 51% of the combined company, post closing. The deal is slated to close before the end of 2018. However, it is subject to regulatory and shareholder approvals, and satisfaction of certain other customary closing conditions.
Notably, Essendant is a wholesale distributor of workplace items whereas S.P. Richards distributes a range of products, including office furniture, computer supplies and school supplies, to resellers in the United States and Canada.
In the past six months, Genuine Parts has underperformed the Zacks Investment Research
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