Systemax acquires B2B direct marketer Plant Equipment Group
January 5, 2015 11:24 AM
Computer gear direct marketer and web merchant Systemax Inc. ended 2014 with an acquisition and is beginning 2015 with a push to sell non-computer gear online to business clients.
Systemax, No. 29 in the Internet Retailer 2014 Top 500 Guide, announced Dec. 31 a definitive agreement to acquire business-to-business direct marketer Plant Equipment Group for $25 million in cash from TAKKT America. The deal for Milwaukee-based Plant Equipment Group, which will operate as part of Systemax' Industrial Products Group, commonly known as Global Industrial, is expected to close this month.
Known as a provider of maintenance, repair and operations supplies, or MRO, Plant Equipment Group operates multiple e-commerce sites. They include Productsforindustry.com and C&H Distributors at CHDist.com in the U.S., Avenue Industrial Supply at AvenueSupply.ca in Canada and CHProductos.com in Mexico. The company’s annual revenue is about $100 million; Systemax and Plant Equipment Group didn’t break out web sales.
The acquisition will help Systemax, which also operates TigerDirect.com and other direct marketing brands such as Global Industrial, Misco and Inmac, become a bigger provider of maintenance and other industrial supplies to businesses, says CEO Richard Leeds. “The North American MRO market is large and fragmented with ample opportunity for growth,” Leeds says. “This acquisition will allow us to bring additional value to our new and existing customers and build on the success and strong growth of our Industrial Products Group."
Even before the acquisition Systemax had been making a bigger play for the business-to-business e-commerce market. Global Industrial, a distributor of products that companies use to maintain and operate their office and industrial facilities, has experienced steady double-digit growth over the past five years. And with an e-commerce site upgraded to be more user-friendly early this year, the company is on track for a greater increase in sales in 2014 over 2013, Global Industrial president Bob Dooley says.
The revised site is stocked with product images and specifications across more than 20 broad categories. Buyers can search by multiple product attributes and navigate to related categories from each product page. “We didn’t make the site flashy or cool, but displayed the content better and made things easier to find,” Dooley says.
The redesign, which Global Industrial carried out in-house with technology staff shared across its parent company, Systemax Inc., helps customers sift through more than 1 million products on GlobalIndustrial.com, including some 200,000 offered by third-party sellers. Global Industrial also sells some products under its own private labels, including several types of storage materials sold under the brands Global, GlobalIndustrial.com and Nexel.
Known as a provider of MRO supplies, Global Industrial also operates two other B2B e-commerce sites: GlobalIndustrial.ca for Canada and GlobalIndustrial.mx for Mexico. The industrial products group was the growth engine for Systemax in the first nine months of 2014, while technology product sales were flat amid a general slump in computer sales in recent years.
For the nine months ended Sept. 30, Systemax reported:
- Sales for industrial products, which include catalog, call center and e-commerce, grew 18.3% to $413.9 million.
- Technology product revenue decreased 0.6% to $2.11 billion.
- Revenue for corporate and other sales increased 12.8% to $4.4 million.
- Total revenue increased 2.1% to $2.53 billion.
- Net loss was $12 million.
Plant Equipment Group was the second B2B acquisition by Systemax last year. In June the company bought SCC Services B.V., a supplier of B2B information technology products and services with operations in the Netherlands, for $7.3 million.