Distribution Solutions wraps up acquisition of specialty products distributor Hisco

Distribution Solutions Group, a specialty distribution company, has successfully finalized its acquisition of Hisco, a distributor of specialty products catering to high-growth industrial technology applications.

The merger of TestEquity and Hisco operations positions Distribution Solutions Group as one of the largest suppliers serving the electronics design, production, and repair industries.

Founded in 1970, Hisco operates across 38 locations throughout North America, including Precision Converting facilities that offer value-added fabrication services and an Adhesive Materials Group providing custom repackaging solutions.

Hisco delivers a wide range of products, including adhesives, chemicals, tapes, and specialty materials. The company also provides specialized warehousing capabilities along with vendor-managed inventory (VMI) and radio-frequency identification (RFID) programs.

In completing the transaction, Distribution Solutions Group paid $269.1 million at closing, with a potential additional earn-out payment of up to $12.6 million contingent upon Hisco meeting specific performance targets.

Furthermore, Distribution Solutions Group will provide retention bonuses of $37.5 million in cash or common stock to selected Hisco employees who remain with the company or its affiliates for at least twelve months after the transaction’s closure.

The funding for the acquisition came from a combination of an expanded amended credit facility and proceeds generated through an equity rights offering involving existing stockholders. Hisco achieved sales exceeding $400 million and adjusted EBITDA of approximately $29 million in the fiscal year ending October 31, 2022.

Distribution Solutions Group anticipates that the acquisition of Hisco will contribute positively to its adjusted performance from 2023 onward.

Piper Sandler & Co. acted as the financial advisor, while Mayer Brown LLP provided legal counsel to Distribution Solutions Group throughout the acquisition process.