Bradco Supply Corp. plans to exit its Wickes business by the end of September and nine of the remaining yards it acquired in 2004 are up for sale, Brad Segal, company president of the Avenel, N.J.-based roofing distributor told ProSales on Monday, July 21.
Last month, Bradco sold its Wickes yard in Portland, Maine, to Hammond Lumber and plans to sell the remaining locations piece-by-piece to independents in the Northeast. Most of the yards are located in the Northeast, including Newtown, Conn., Hampton, N.H., and Ithaca, N.Y.
Of the 20 yards that were acquired after the former Wickes went bankrupt four years ago, Bradco closed seven locations, including a manufacturing facility, in the months following the purchase. It eventually converted three other locations to pure Bradco locations focusing on roofing products (70% of Bradco's business), siding, windows and ancillary materials.
The 2004 acquisition also included the Wickes brand name, which looks to be finished once Bradco completes the sales. Segal, in an interview with ProSales, said a deal to sell all of the yards to a single buyer fell through, hence the piecemeal route.
With sales of more than $1.7 billion in 2007, Segal said he does not expect Bradco to take a hit, despite the sale of the Wickes units. Brado has more than 130 locations in 30 states.
"The Bradco business is doing very well," he said.
Segal said Bradco was never "fully committed" to the Wickes business "as much as we needed to be."
"There are two ways to be in any business," Segal told ProSales. "You have to be either a large national player or a local, niche player that has known all of its customers forever. Wickes was neither."
"We were not a top two or three in the industry and we're not going to get to that position easily," Segal explained. "It didn't make any sense given the market and the outlook for the market."
As ProSalesreported last week, Advent International, a private equity firm, had signed a deal to acquire a majority stake in the company. That deal is expected to be completed by August and will leave the Segal family with a 10% stake in the company. Apollo Management, a New York-based private equity and investment firm that made an undisclosed investment in Bradco in 2007, will also hold a minority share.
Segal said the Advent buy-in allows his father, company founder Barry Segal, the chance to "fully" retire, despite a previous announcement this year and the hiring of CEO Ted Boylan. "My father retired but he had a tough time separating from the business. This allows him to really separate," Segal said.
Bradco's management, including Boylan and Segal, along with his brother and vice president Martin Segal, are remaining with the company.
Additionally, Advent's entry into Bradco is likely to make the company "more aggressive in acquisitions than we have been in the past," Segal said. That doesn't mean Bradco didn't already have a healthy war chest for acquisitions.
"We had plenty of money to buy companies beforehand," Segal said. "Our balance sheet is very strong and we had a good line of credit we hardly borrowed from."