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Hennessy & Simmons LLC (“CHS”) announced
today that it has made a majority equity investment in STS
Operating, Inc. (“SunSource”), the largest independent
distributor of fluid power products and systems in the United
States. The former majority owner, Allied Capital Corporation
(“Allied Capital”), will continue working with
SunSource as the company's subordinated debt lender.
Through
34 locations nationwide, SunSource distributes 100,000 unique
hydraulic, pneumatic, motion control and filtration products
manufactured by over 300 leading vendors to more than 17,000
customers. SunSource also provides complementary value-added
services including the engineering and design of fluid power
systems for original equipment manufacturers, assembly and
repair services and technical training.
“SunSource represents an excellent
opportunity for CHS to leverage our experience as an investor
in distribution businesses,” said David Hawkins, Partner
at CHS. “The company demonstrates characteristics of
our most successful distribution investments: a competitive
product line with thousands of SKUs; relationships with a
large customer base in diversified end markets; long-term
partnerships with leading manufacturers; broad geographic
reach with 34 locations nationwide; differentiation through
value-added service offerings; and a capable management team
with a track record of executing successful acquisitions.
We look forward to working with Justin Jacobi, the entire
SunSource team and Allied Capital to extend the company's
record of success.”
Justin
Jacobi, CEO of SunSource, said, “We look forward to
working with our new partners at CHS as well as continuing
our relationship with Allied Capital as we position our company
for its next phase of growth. We are particularly excited
about CHS' track record in the distribution arena. Being
able to tap into both CHS' experience as well as the executive
teams at their other distribution portfolio companies gives
SunSource a significant competitive advantage.”
The investment in SunSource complements
CHS' portfolio of investments in the distribution industry,
which currently includes Beacon Roofing Supply, Inc. (Nasdaq:
BECN), a leading distributor of residential and commercial
roofing products; The Hillman Group, a leading distributor
of fasteners, key blanks, signage and other small hardware
components; Hoboken Wood Flooring Corporation, a leading
distributor of hard surface flooring; Home Acres Building
Supply Co., a leading distributor of gypsum wallboard in
the Upper Midwest; and Houston Wire & Cable Company (Nasdaq:
HWCC), the largest U.S. distributor of specialty wire and
cable.
CHS is a Chicago-based private equity firm
specializing in private equity investments and recapitalizations
of middle market companies in partnership with management.
CHS has formed five private equity funds and currently manages
over $2.5 billion of capital. Funds for CHS' investment in
SunSource came from CHS Private Equity V LP, a $1.3 billion
investment fund formed in 2005.
For more information on SunSource, please
refer to the company's Web site at www.sun-source.com.
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