Anixter buying Distribution Dynamics after bankruptcy filing
Distribution Dynamics Inc. (DDI) recently agreed to sell its assets and operations to Anixter International Inc.
Distribution Dynamics Inc . (DDI) recently agreed to sell its assets and operations to Anixter International Inc . for $25 million. The proposed sale is subject to approval by U.S. Bankruptcy Court for the District of Minnesota, where DDI has filed a petition for relief under Chapter 11. DDI distributes fasteners and small components to original equipment manufacturers (OEMs).
The company’s agreement with Anixter doesn’t include its operations in Kansas City, MO, which Anixter acquired under another purchase agreement. DDI’s operations in Portland and Medford, OR, are also excluded from the latest sale.
In connection with its proposed purchase, Anixter plans to assume some of DDI’s obligations as part of the facility and operating leases that apply to the operations it’s buying. Anixter also plans to offer employment to the staffs at DDI’s former facilities. In addition, Anixter intends to offer to purchase certain valid, unsecured pre-petition claims in the bankruptcy to the extent those claims apply to product sales to the operations that will be acquired by Anixter.
"We have an excellent team of people at Distribution Dynamics, all of whom have worked exceptionally hard to service a blue chip group of customers. The financial challenges of the past few years have accumulated to the point where it is now in the best interest of our customers, employees, and suppliers to seek a fresh start," says Dominic Polimeni, DDI’s president and CEO. "Anixter has built a significant presence in supplying fasteners and other small components, through its prior acquisitions of Pentacon and Walters Hexagon. It is a strong company that has all the resources, both financially and operationally, to ensure the continued quality service and uninterrupted supply of product to our customers for which DDI has earned one of the finest reputations in the industry.
"At the same time, because of Anixter's size, its offers excellent career opportunities for our employees. Lastly, in the current situation, it is likely that the recovery, if any, by unsecured creditors against their pre-petition claims will be negligible. Anixter's willingness to purchase certain claims at a level in excess of what is likely to be recovered from the bankruptcy process is an excellent opportunity for key product suppliers to minimize their financial losses in this situation. We’re also pleased to announce that our lenders have agreed to continue to support us, in order to provide the liquidity necessary for DDI to meet its commitments and to continue to operate during the period of the bankruptcy proceedings."
Robert Grubbs, Anxiter’s president and CEO, adds that, "We have committed significant financial resources to building a fastener-focused OEM supply business over the past couple of years. Prior to the pending acquisition of DDI, we generated approximately $300 million in sales per year from the sale of fasteners and other small components to OEMs in the U.S. and U.K. We believe that acquiring DDI’s operations will expand our geographic coverage in the U.S. and make us an even more attractive supplier to multi-location OEMs looking to improve supply chain efficiency.
"If we’re successful in completing this acquisition, we intend to convert the DDI locations to the same business systems as our Pentacon operations. For customers and vendors, this will be an important step in giving our U.S. service capabilities the same look, feel, and quality. We believe that one of the keys to success in any distribution business is developing common systems, processes, and corporate culture to make it as easy and consistent as possible for large customers to do business with us.
"Unfortunately, we understand that DDI's financial condition makes it impossible for DDI to make all of its unsecured creditors whole. Nonetheless, Anixter recognizes the importance of those manufacturers who supply products to DDI to the overall continuity of the supply chain to the customer, and to the future success of the business. We believe that the continued support of DDI's lenders during the bankruptcy proceedings, combined with Anixter's willingness to purchase certain pre-petition claims, will minimize any risk to the continuous supply of goods through DDI to its customers."
—Jim Montague, news editor, Control Engineering, firstname.lastname@example.org