October 11 , 2010, Volume xvi, #39

“In a negotiation, he who cares less, wins.” —Anonymous“

TIM-BR MART enters distribution business with CanWel purchase

  CALGARY — TIM-BR MARTS Ltd., the giant national LBM buying group, has entered into an agreement to acquire CanWel Hardware from CanWel Building Materials Group Ltd. The deal includes CanWel’s hardware distribution facilities operations in Victoriaville, Que. and London, Ont., plus two Chalifour building material warehouses in Quebec. It also provides TIM-BR MARTS Ltd. ownership of the “Pro” name and licensing rights to the Ace brand in Canada.

The deal was approved by the TIM-BR MART board, headed by its chair, Ron Slegg, of Slegg Lumber on Vancouver Island. The acquisition is worth $50 million, and is expected to close in the fourth quarter. Financing for the transaction will be provided by HSBC. CanWel Hardware’s parent company, CanWel Building Materials, which began the year by acquiring rival Broadleaf Logistics, will use the money to pay down debt – with a mind to future growth.

According to Tim Urquhart, president and CEO of TIM-BR MARTS Ltd., the deal will increase the ability of his dealer members to strengthen their hardlines assortments. “They are the leading purchasers of building materials in Canada and now they will be the leaders in hardware as well,” he said in a prepared release.

TIM-BR MART represents more than 700 dealers and about $2 billion in buying power. Its ranks include IRLY Distributors on the West Coast and Groupe MatPlus in Quebec.

back to top

TIM-BR MART plans “business as usual” for CanWel acquisition

SPECIAL REPORT — TIM-BR MART’s acquisition of the hardware distribution business of CanWel puts that company into the hands of one buying group. That banner also competes against other groups, such as Castle Building Centres and TORBSA, which are also customers of CanWel Hardware. Nevertheless, TIM-BR MART fully expects to continue selling to these customers.

Indeed, some of them – Sexton Group, Delroc, Federated Cooperatives, and La Coop fédérée – are all members, along with TIM-BR MART and CanWel Hardware, in Spancan, an umbrella buying group for hardware purchases. TIM-BR MART intends to continue using the preferred suppliers that work with CanWel Hardware through Spancan. (For a full explanation of the Spancan group, including IHDA and ILDC, check out our Annual Buying Group Report, available now in our sister pub, HQR! —Editor)

Tim Urquhart, president and CEO of TIM-BR MART, noted in a release, “It is business as usual – actually, we aim to be better than usual,” adding that the acquisition will not disrupt supply from CanWel’s four warehouses.

But TIM-BR MART actually intends to use five warehouses.

The group’s sister buying group, IRLY Distributors, has a DC of its own in Surrey, B.C. TIM-BR MART and IRLY are working together to ramp that facility up to supply dealers beyond its current market area of British Columbia, and ship all the way to Saskatchewan with products imported into Surrey by the container-load from China.

CanWel Hardware’s DCs in London, Ont. and Victoriaville, Que., are expected to supply TIM-BR MART dealers in Central Canada and the Atlantic region. Two LBM warehouses in Quebec will continue to supply lumber and building materials to dealers within that province.

TIM-BR MART will hold its own buying show, which will include IRLY dealers, on March 31-April 2, 2011.

(NOTE: TruServ is no longer a member of Spancan, the umbrella hardlines buying group. According to a letter from Spancan, those sales volumes will be replaced internally. Please click here to see the full letter sent to Spancan members and suppliers. —Michael)

back to top

RONA plans to expand dealer options with TruServ acquisition

     WINNIPEG — RONA president and CEO Robert Dutton was here last week, meeting with TruServ Canada staff and dealers at TruServ’s dealer market. “It was,” says Bill Morrison, CEO of TruServ, “nice to have the face of RONA here and learn about his background.”

RONA has signed an agreement to buy TruServ, pending shareholder approval. When the deal is done, Morrison says TruServ will continue to operate as a distinct operation from RONA – and his dealers will continue to operate under the True Value banner.

By continuing to operate as a separate unit, the TruServ facility in Winnipeg will continue to offer hardlines to both True Value dealers and other independents. “Some dealers prefer to have more freedom, and choose to rely on good pricing and good marketing programs. We respect that,” says Dutton.

“We realize that CanWel Hardware is going to disappear and the independents need a wholesaler.”

TruServ’s distribution business is currently worth more than $100 million, but Dutton believes that can be doubled over the next two or three years, in part by catering to other banners besides True Value. “So we can be there for some orders, and fill-in shipments, for other banners, including Castle and TIM-BR MART.”

RONA already has a DC in Calgary, but that facility is nearing capacity, says Jean-Luc Meunier, senior vice-president, affiliate dealer-owner network development at RONA. The company plans, he says, to work out how best to leverage the two warehouses.

back to top

Independents weigh options amidst latest consolidation

NATIONAL REPORT — In the space of two business days, Canada’s two remaining national hardware distributors were taken over by rival companies. RONA’s acquisition of TruServ Canada on Oct. 1 and TIM-BR MART’s acquisition of CanWel Hardware can potentially put a large number of independent dealers in a position of deciding whether to support, at least indirectly, a direct competitor.

Ken Jenkins, president of Castle Building Centres Group, says neither deal comes as a surprise. “With TruServ, this was a question of ‘when’ rather than ‘if’. TruServ has had trouble over the past couple of years as vendors were getting faced with longer wait times on their payables,” he says. “CanWel has, to be honest, been struggling for the last few years,” he continues.

Jack Crombie, for one, has found his answer south of the border. Crombie, who owns a Castle dealership in Hudson, Que., already gets about 25% of his front-end needs supplied by Orgill, a large independent hardware distributor based in Memphis. “I could probably increase that to 75%,” he says.

The other 25%, he adds, involve items that are subject to domestic regulations, including herbicides and pesticides, as well as some plumbing and electrical products that must meet Canadian standards. The majority of those items could be sourced, he says, from distributors such as Cathelle, Emco, USCAN Fasteners and Richelieu.

Kim Emmerson, of Haliburton Lumber in Haliburton, Ont., is another Castle dealer who will look elsewhere for his hardlines needs. “It makes me wonder if Castle and other competitors will continue to buy from CanWel,” he muses. He too has been approached by Orgill. “I believe there’s some opportunity for us there.”

Orgill, which announced its entry into Canada at the HARDLINES Conference in 2008, has been supplying dealers across the country on a fill-in basis. At the Orgill dealer market in Chicago in August, more than two dozen Castle dealers, along with TIM-BR MART and TORBSA representatives, were in attendance.

back to top

RONA’s commercial division to buy Don Park

BOUCHERVILLE, Que. — RONA inc. has made yet another acquisition this week, this time on its commercial side. Through its subsidiary Noble, it has signed an agreement to purchase the assets of Don Park Limited Partnership in Canada. This HVAC distributor operates 14 branches, three manufacturing facilities and one distribution centre in Ontario. Owned since 2005 by TerraVest Income Fund, Don Park has more than $90 million in sales and 400-plus employees.

The deal, pending regulatory approvals and other conditions, is expected to close by the end of December.

According to Michael Storfer, vice-president of RONA’s Commercial and Professional Market division, this latest acquisition gives his business unit a stronger presence in Ontario, and is part of a larger strategy to establish a national presence in the commercial and professional market. “Most of Noble’s business had been in plumbing,” he explains. “The HVAC initiative started a year ago. This is a natural extension of our HVAC side.”

The Don Park deal also gives RONA an injection of knowledgeable employees with a wealth of product knowledge and customer contacts. “I expect the expertise that we’ve acquired will help us expand beyond Ontario,” Storfer says, hinting at further acquisitions – “the next one in “an ‘A’ province.” However, he adds, growth will come from within, as well, as his division continues to open new branches.

(Michael Storfer is our keynote speaker at the 15th Annual HARDLINES Conference, Oct. 28-29 in Toronto. For more information about this important event, click here —Michael)

back to top

Classifieds

Resumés

• A conscientious, highly motivated manager with a results-oriented track record in developing new business. view this resumé
• A goal oriented sales director that has superior management skills, customer oriented, with in depth knowledge of the industry and the ability to achieve results. view this resumé
• National Field Sales Manager with twelve plus years in power tools and hardware sales/merchandising. view this resumé
• Business Manager with U.S. & Canadian experience with retail & industrial customers seeks a new opportunity. view this resumé
• An experienced merchandising executive possessing passion, vision, and a strategic approach to delivering bottom-line. view this resumé
• Senior sales/marketing leader with experience in all classes of trade wishing new HARDLINES career. view this resumé
• Very Experienced Business Unit Manager, great passion for generating sales and building relastionships.view this resumé
• Worked through my career within the manfucaturer, wholesale and consumer goods industries. view this resumé
• Senior Sales Manager with vast experience in retail and wholesale sales growth in Canada. view this resumé

Only 17 more days until the Hardlines Conference!

Overview	Agenda	Register	Speakers	Sponsors

Connect with us!