New York, NY—Hardwoods Distribution Inc. (TSX:HDI) will acquire Novo Building Products for $303 million from private equity firm Blue Wolf Capital Partners.
Headquartered in Zeeland, MI, 1,400-employee Novo manufactures and distributes mouldings, millwork, stair parts, and other specialty building products to national home retail centers and building material dealers throughout the U.S. and parts of Canada and Mexico. Novo operates 14 facilities in the Eastern and Midwestern U.S., and in Florida and Texas. Its divisions include Empire Moulding & Millwork, Southwest Moulding & Millwork, Ornamental Decorative Millwork, LJ Smith Stair Systems, and Novo Direct.
Hardwoods Distribution Inc. is North America’s largest distributor of architectural grade building products to the residential and commercial remodeling and construction industries. In its latest quarterly results, Hardwoods reported sales grew 20.4% to $291.2 million. Novo Building Products did $640 million in revenue last year.
“This highly strategic acquisition provides a symbiotic fit with our existing operations as a distributor of high value, specialty, non-commodity building materials with a national footprint and leading market position,” says Rob Brown, HDI’s president and CEO. “Novo deepens our presence in the attractive residential, and repair and remodel markets, where we expect a multi-year runway for growth.”
Brown says the deal gives Hardwoods Distribution turnkey entry into the home center customer segment, representing roughly half of Novo’s revenue. As a primary supplier to national and regional home improvement retailers in both physical and online store aisles, Novo provides individual store planning, logistics, supply chain management, marketing, and merchandising, e-commerce, and in-store stocking and material handling. It also gives Hardwoods Distribution a turnkey entry into the Pro Dealer customer segment, the other half of Novo’s revenue.
Blue Wolf acquired Novo in 2016 from Tenon Limited, a New Zealand-based public company. It has since focused on achieving operational efficiencies and on diversifying Novo’s customer base and product portfolio through organic growth and mergers and acquisitions. “Our investment involved a highly complex carve-out from a publicly traded, international corporation,” says Adam Blumenthal, managing partner of Blue Wolf.
In 2019, George Judd, a former building materials exec, was appointed CEO and positioned Novo for long-term growth. “I am confident that HDI is the ideal long-term owner for Novo and expect that our employees will benefit from new opportunities as part of HDI’s larger platform,” says Judd. The transaction is expected to close by early August 2021.
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