Following closely on the heels of two other major MRO deals – Cromwell acquired by Grainger (USA) and Hayley Group investment by Descours & Cabaud – Brammer now looks set to change hands. However, it is telling the acquirer is a PE vehicle rather than an overseas strategic player, as in the case of the former deals. The Brammer board have recognised the questions this begs and, as shown below, addressed them head on. Whether these factors mean the appearance of an alternative offer is unlikely remains to be seen. If not, and the deal completes, I would suggest there are a number of buy & build deals to follow. Owners of mid-sized industrial products distributors should make sure they are ready to make the most of this industry consolidation.
Brammer told investors that the recent strategic review has identified a number of "material operational issues and the key actions needed to address these issues". It added that the board considers addressing these operational issues to deliver a turnaround of the business as a listed company would be complex, require significant structural and behavioural changes, incur significant cash reorganisation costs and take at least three years to implement and would, therefore, carry significant execution risk and uncertainty for a public company.