W.W. Grainger Inc. (GWW) entered into a joint venture with THF International SAS (“THF”), an associate of Torhefe S.A., by acquiring substantially all of the assets of Torhefe. The new entity will be named “Grainger Colombia”.
As per the agreement, the majority stake of 80% will be owned by Grainger while THF will hold the remaining 20%. The terms of the deal are yet disclosed.
The joint venture is in sync with Grainger’s history of making acquisitions. Some recent takeovers by Grainger include: K&D Pratt Industrial Division, a distributor of industrial and safety products acquired on November 28, 2009; Alliance Energy Solutions, a provider of energy efficient retrofits acquired on November 18, 2009; Imperial Supplies, LLC a distributor of maintenance and aftermarket components acquired on Oct 14, 2009; and Asia Pacific Brands, an electrical wholesale distributor acquired on June 2, 2009.
Grainger is already operating in Mexico, Panama, Puerto Rico and Trinidad. The formation of Grainger Colombia further enhances its exposure in the Latin American countries. The company plans to continue to market the products under the Torhefe brand name for the current year and subsequently shift to Grainger in the coming years.
Grainger is expected to benefit from the deal by exploiting the established distribution channels of Torhefe and sharing its technical expertise. With a strong supply chain in North America, Grainger expects to establish its competency in the Latin American market.
Torhefe is a premier distributor of maintenance, repair and operating (MRO) products in Colombia. It is presently spread over five locations in Colombia − Barranquilla, Bogota, Cali, Cartagena and Medellin.
Lake Forest, Illinois-based Grainger is a distributor of MRO products. The company operates in the United States, Canada, Mexico and China.
Read the full analyst report on “GWW”
Zacks Investment Research
