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Home Depot Buys Interline

Aug. 1, 2015
Interline is a national distributor and direct marketer of maintenance, repair and operations (MRO) products with 90 locations throughout North America.

To bolster its business with the professional customers who already account for roughly one-third of its $83.2 billion in annual sales, Home Depot, Atlanta, has signed a definitive agreement to acquire Jacksonville, Fla.-based Interline Brands, Inc., for $1.63 billion. Interline is a national distributor and direct marketer of maintenance, repair and operations (MRO) products with 90 locations throughout North America.

Interline has a major focus on servicing the multi-family residential and institutional MRO markets and an interesting mix of business. According to its 4Q 2014 financial data, its key customers segments are institutional (50%); multi-family (30%); and residential (20%). The company’s institutional mix of business that accounts for half of its sales includes the educational, health-care and property markets. Its MRO product mix is janitorial/sanitation (45%), plumbing (18%), hardware (9%), HVAC (8%), appliances (6%), electrical (5%), security (4%) and other products (5%).

Along with selling electrical products under its new SupplyWorks brand, the company also sells some electrical products under private brands, including AF Lighting (residential lighting products), and Preferred Industries (shelf-good items including wiring devices, boxes, connectors and wall plates).

The purchase of Interline Brands will no doubt pit Home Depot against W.W. Grainger Inc., Lake Forest, Ill., in servicing institutional and multi-family residential accounts. While Grainger is an acknowledged master of online sales in the distribution space, and www.grainger.com accounted for 36% of the company’s 2014 annual sales, e-business accounts for a relatively small although rapidly growing proportion of sales for Home Depot. According to information in Home Depot’s most recent annual report, online sales increased 36.9% from 2013 to 2014 and represented approximately 4.5% of the company’s total.

Interline has a higher percentage of online sales to offer Home Depot. E-biz accounts for 20% of sales and the company was ranked as one of the 100 largest e-commerce merchants by Internet Retailer magazine.

Earlier this year, Interline Brands announced the launch of SupplyWorks as a new national brand, combining five of its largest brands —  AmSan, CleanSource, JanPak, Trayco and Sexauer — under one brand that it said will account for more than $850 million in annual revenue.