Less then 12 hours removed from its 51% acquisition of Stock Building Supply from Wolseley Plc, an executive of The Gores Group revealed that the private equity group plans to straighten out the nation's second-largest LBM dealer and position the company for future acquisitions.
"You always look at what's out there," Frank Stefanik, executive vice president of business development and marketing at the Los Angeles-based firm, told ProSales during a telephone interview this afternoon.
"From here, we are going to focus the company, we are going to grow the company and we are going to build value in the company," Stefanik added.
Wolseley, which several months ago had said it would dump Stock if it didn't find a joint venture partner by Aug. 1, announced early today it would sell 51% of Stock to The Gores Group. The group has $1.7 billion in holdings and oversees 17 companies, almost all of them acquired from larger corporations.
Stefanik said the first priority is to focus Stock on its "core business." That translates into changing the culture of Stock and preparing it to operate once again as a stand-alone business.
"We are very good at extracting businesses and readying them to operate on their own," Stefanik explained. "That's what Stock was until Woseley bought them in the mid-1980s."
The Gores Group has not owned any companies directly involved in lumber industry; its history largely involves buying companies in the technology, telecom and business services sector. But the equity group does own Somero Enterprises, a manufacturer concrete placing equipment used in the construction of big-box store floors, including Wal-Mart and The Home Depot.
Despite the LBM market sliding into arguably its worst period in years, Stefanik says the Grove Group knows what it's getting into and has paid close attention to the state of affairs.
"Everything goes in cycles," he said. "What goes up comes down, what comes down goes up.
"We think Stock is a very, very good company and a lot of things came down at the same time," he added, referring to the financial problems worldwide that Wolseley felt and that prompted it to get rid of its controlling interest in Stock during tough times.
Stock filed today what is referred to as a "pre-packaged" Chapter 11 bankruptcy petition. It's designed to get Stock in and out of bankruptcy status in just 45 to 60 days. Seeking Chapter 11 bankruptcy was part of The Gore Group's requirements for the deal.
Once Stock exits Chapter 11 bankruptcy protection, Gores plans to get out and meet the dealer's customers, introduce themselves, and explain where the LBM giant is headed.
Although 161 Stock locations were shed by Wolseley in the last two years, closings could continue. "Most of that work has been done," Stefanik noted. Then he added: "But good companies never stop doing that. ... You have to pay close attention."