Editor’s note: Two distribution-related news stories broke as the October issue of PCT was about to go to press. On Sept. 2, it was announced Clayton, Dubilier & Rice and CVC Capital Partners had acquired a 42.5 percent ownership interest in Univar, the largest distributor serving the pest management industry. Three weeks later, Residex and Turfgrass Inc., a distributor of turf and ornamental products, announced plans to merge. Coverage of these important stories appears below, as well as the surprising news that Glen Rollins had been relieved of his duties as president of Orkin by the Rollins board of directors in September (see page 205).
Clayton, Dubilier & Rice
Purchases Stake in Univar
NEW YORK – Clayton, Dubilier & Rice, and CVC Capital Partners, recently announced a definitive agreement for CD&R to acquire a 42.5 percent ownership interest in Univar, a leading global distributor of commodity and specialty chemicals to a broad array of end markets — including the structural pest control industry. The transaction values the company at approximately $4.2 billion. Funds advised by CVC, a private equity firm founded in 1981, will retain a 42.5 percent stake in the business. The remaining equity will be held by Univar management and other existing investors.
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Univar at a Glance
Year Founded: 1924
Headquarters: Redmond, Wash.
2009 Revenue: $7.2 billion (net sales)
U.S. and Canadian Market Ranking by Sales: #1
European Market Ranking by Sales: #2
Number of Facilities: More than 170 distribution facilities in North America, Europe, Asia-Pacific and Latin America, with additional Univar sales offices located in Eastern Europe, Africa and the Middle East.
Products Distributed: 11,000+ products/110,000+ SKUs (stock-keeping units)
Number of Customers: 80,000+
Pest Management Operations: Univar’s pest control business is based in Austin, Texas, and led by John Bolanos, vice president, Professional Products & Services. The company purchased Southern Mill Creek Products earlier this year, expanding its market footprint in the Midwest.
Source: U.S. Securities and Exchange Commission Filing
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"Univar’s business profile fits our investment focus perfectly, and we look forward to working with CVC and the Univar management team to continue to build the business," said David H. Wasserman, a CD&R partner who also led the acquisition of Hertz from the Ford Motor Company, and the acquisition of ServiceMaster, two of the company’s other investments. A graduate of Amherst College who holds an M.B.A. from Harvard Business School, Wasserman previously served on the board of Kinko’s and led the negotiations resulting in the sale of the company to FedEx.
"Over the last several months, there has been significant interest in Univar and its growth prospects from private equity investors," added Chris Stadler, managing partner, CVC Capital Partners. "We focused on those investors which would bring significant industry experience and alignment with CVC in the partnership approach with management."
Gijs Vuursteen, CVC managing director, commented: "Our new partners at CD&R have a deep understanding of the sector and are very well placed to help us in our continued efforts to support the growth of the company and the management team’s strategic and operational initiatives. We continue to be enthusiastic about Univar’s business and future growth and believe that this is the right partnership to advance the company."
Concurrent with this announcement, Univar has postponed its initial public offering of shares of its common stock and intends to withdraw the registration statement, filed in June 2010, with the U.S. Securities and Exchange Commission for its proposed IPO.
CD&R partner, George K. Jaquette added: "We have been very impressed with John Zillmer and his team, and look forward to working with them to build long-term value in the years ahead."
Zillmer will remain Univar’s president and chief executive officer. CD&R operating partner, William S. Stavropoulos, former chairman and chief executive officer of The Dow Chemical Company, will become the non-executive chairman of Univar.
In recent years, Univar has benefitted from the growing shift to third-party distribution in the chemical industry, according to a press release announcing the transaction. The trend is driven by a combination of factors including globalization, chemical producers continuing to streamline operations through outsourcing, and the ability of scale distributors, like Univar, to offer customers value-added services and a cost-effective channel to market.
"CD&R is widely respected as a business builder with a deep understanding of our industry and distribution business models," Zillmer said. "We welcome CD&R’s involvement and CVC’s continued commitment to our growth, success and long-term value creation."
In a letter to customers following the announcement, John Bolanos, vice president, Professional Products & Services, said, "In the short term, this transition will mean ‘business as usual’ for our customers and suppliers. Univar simply has new investors, and you will receive the same world-class service that you have always received from us. Over the longer term, you can expect even higher levels of service, support and expertise, as we grow the business, expand into new markets, extend our reach with new products and services, and operate more efficiently on a global basis."
Industry observers appear to agree, particularly given the relatively modest size of Univar’s pest management business in relation to the company’s overall operations.
"I don’t think it will change operations much," said Dave Morris, commercial director, pest management, Dow AgroSciences. "Since they have been operating with PE (private equity) investment up to this point and continuing to invest in this part of their business, I would expect that to continue. It may afford them cash to continue to acquire pest management distribution companies to grow their footprint in this business. I am sure CD&R did not get into this for the pest management part, but for the overall Univar operations, of which pest management is a small part."
Founded in 1978, CD&R is a leading private equity firm with a long history of investing in distribution businesses. CVC Capital Partners is one of the world’s leading private equity and investment advisory firms. The transaction is expected to close in the fourth quarter of 2010.
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Residex, Turfgrass Inc. to Join Forces
ROSELLE, N.J./nOVI, mich. – Residex, a structural pest control distributor based in Roselle, N.J., and Turfgrass Inc., a distributor of turf and ornamental products and services based in Novi, Mich., recently announced plans to merge. The distributors reported they have reached an agreement in principle and plan to conclude the merger by Dec. 1, 2010. The combined company will operate under both the "Turfgrass" and "Residex" names using all the same facilities, personnel and operations of each company.
In the combined company, Chris Donaghy will serve as CEO, and Todd Griebe will serve as president. In a letter to customers, the executives said, "The combination of Turfgrass and Residex is one of many steps we are taking to expand and improve the products and services we offer our customers across a larger territory. We see this transaction as an opportunity for our customers to take full advantage of the expanded products, services and business solutions our companies will offer together. Our combined strengths in larger markets and territories will also be a growth opportunity for our employees and suppliers."
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Residex at a Glance
Year Founded: 1946
Website: www.residex.com
Headquarters: Roselle, N.J.
Number of Facilities: 17 distribution centers in 8 states
Number of Employees: 70+
Key Executive: Chris Donaghy
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Turfgrass Inc. at a Glance
Year Founded: 1970
Website: www.turfgrassinc.com
Headquarters: Novi, Mich.
Number of Facilities: 8 distribution centers in 5 states
Number of Employees: 60+
Key Executive: Todd Griebe
Source: www.residex.com and www.turfgrassinc.com
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Rollins Inc. Upheaval Stuns
Pest Control Industry
ATLANTA – The Board of Directors of Rollins Inc., acting through its independent directors, in early September terminated the employment of Glen W. Rollins as executive vice president of the company and as president of the subsidiaries of the company including Orkin LLC.
According to an article in the Atlanta Journal-Constitution, family discord within Rollins Inc., was the reason Glen W. Rollins was fired by the company’s board of directors, which includes his father, Gary W. Rollins, the CEO; and his uncle, R. Randall Rollins, the chairman.
No reason was given in the five-sentence news release from the company, but Rollins’ firing comes as he and his siblings — Ruth Ellen Rollins, Nancy Louise Rollins and O. Wayne Rollins II — filed a lawsuit suit against their father, Gary W. Rollins and uncle, R. Randall Rollins. The lawsuit, filed in Fulton County Superior Court on Aug. 23 appears to be a dispute over the children’s trusts, on which Gary Rollins and his brother, R. Randall, serve as trustees. The court documents are currently under seal by the court.
"We view this as a family matter," Martha Craft, vice president, public relations and corporate communications, Rollins Inc., told PCT shortly after the announcement. The lawsuit does not name the company itself.
When contacted by PCT, Glen Rollins would not comment on the particulars of the case or his termination, stating he and his siblings are "striving to take the high road."
Gary Rollins, who served as Orkin’s president until 2004 and has been Rollins’ president since 1984, will assume day-to-day responsibilities at the company for the time being. "We don’t see it (Glen’s dismissal) affecting the company or the profitability of the company and the analysts are saying the same thing," said Craft, who added that Gary Rollins is "not a rookie" when it comes to running the business.
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